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)
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
10 | ||||
11 | ||||
12 | ||||
13 | ||||
14 | ||||
26 | ||||
28 | ||||
29 | ||||
31 | ||||
31 | ||||
32 | ||||
33 | ||||
34 |
(subadvised by Wellington Management Company, LLP) | Investment objective — Seeks maximum long-term total return. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | 10 | ||||||||||
Year | Year | Year | ||||||||||
Advisers A# | 20.47 | % | 1.67 | % | 1.02 | % | ||||||
Advisers A## | 13.84 | % | 0.53 | % | 0.45 | % | ||||||
Advisers B# | 19.31 | % | 0.83 | % | NA | * | ||||||
Advisers B## | 14.31 | % | 0.50 | % | NA | * | ||||||
Advisers C# | 19.35 | % | 0.94 | % | 0.33 | % | ||||||
Advisers C## | 18.35 | % | 0.94 | % | 0.33 | % | ||||||
Advisers R3# | 20.20 | % | 1.72 | % | 1.29 | % | ||||||
Advisers R4# | 20.47 | % | 1.88 | % | 1.37 | % | ||||||
Advisers R5# | 20.83 | % | 2.05 | % | 1.46 | % | ||||||
Advisers Y# | 20.98 | % | 2.12 | % | 1.49 | % | ||||||
Barclays Capital Government/Credit | 14.60 | % | 4.79 | % | 6.32 | % | ||||||
Bond Index | ||||||||||||
S&P 500 Index | 9.78 | % | 0.33 | % | -0.95 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year 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) | Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
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
3
as of October 31, 2009
Percentage of | ||||
Category | Net Assets | |||
Asset & Commercial Mortgage Backed Securities | 0.5 | % | ||
Common Stocks | 66.1 | |||
Corporate Bonds: Investment Grade | 13.2 | |||
Municipal Bonds | 0.8 | |||
U.S. Government Agencies | 0.7 | |||
U.S. Government Securities | 15.4 | |||
Warrants | 0.0 | |||
Short-Term Investments | 3.3 | |||
Other Assets and Liabilities | — | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Equity Securities | ||||
Automobiles & Components (Consumer Discretionary) | 0.5 | % | ||
Banks (Financials) | 2.5 | |||
Capital Goods (Industrials) | 6.3 | |||
Diversified Financials (Financials) | 6.6 | |||
Energy (Energy) | 9.3 | |||
Food & Staples Retailing (Consumer Staples) | 2.2 | |||
Food, Beverage & Tobacco (Consumer Staples) | 4.3 | |||
Health Care Equipment & Services (Health Care) | 2.6 | |||
Insurance (Financials) | 1.3 | |||
Materials (Materials) | 0.5 | |||
Media (Consumer Discretionary) | 1.5 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 6.7 | |||
Retailing (Consumer Discretionary) | 4.6 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 1.7 | |||
Software & Services (Information Technology) | 6.1 | |||
Technology Hardware & Equipment (Information Technology) | 6.4 | |||
Transportation (Industrials) | 2.4 | |||
Utilities (Utilities) | 0.6 | |||
Fixed Income Securities | ||||
Air Transportation (Transportation) | 0.4 | |||
Arts, Entertainment, and Recreation (Services) | 0.0 | |||
Beverage and Tobacco Product Manufacturing (Consumer Staples) | 0.1 | |||
Computer and Electronic Product Manufacturing (Technology) | 0.1 | |||
Electrical Equipment, Appliance Manufacturing (Technology) | 0.2 | |||
Finance and Insurance (Finance) | 8.6 | |||
General Obligations (General Obligations) | 0.4 | |||
Health Care and Social Assistance (Health Care) | 0.6 | |||
Higher Education (Univ., Dorms, etc.) (Higher Education (Univ., Dorms, etc.)) | 0.1 | |||
Information (Technology) | 1.0 | |||
Machinery Manufacturing (Capital Goods) | 0.1 | |||
Motor Vehicle & Parts Manufacturing (Consumer Cyclical) | 0.3 | |||
Petroleum and Coal Products Manufacturing (Energy) | 0.3 | |||
Pipeline Transportation (Utilities) | 0.2 | |||
Real Estate and Rental and Leasing (Finance) | 0.3 | |||
Retail Trade (Consumer Cyclical) | 0.1 | |||
Soap, Cleaning Compound and Toilet Manufacturing (Consumer Staples) | 0.4 | |||
Tax Allocation (Tax Allocation) | 0.1 | |||
Transportation (Transportation) | 0.2 | |||
U.S. Government Agencies (U.S. Government Agencies) | 0.7 | |||
U.S. Government Securities (U.S. Government Securities) | 15.4 | |||
Utilities (Utilities) | 1.0 | |||
Short-Term Investments | 3.3 | |||
Other Assets and Liabilities | — | |||
Total | 100.0 | % | ||
4
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 66.1% | ||||||||
Automobiles & Components — 0.5% | ||||||||
587 | Ford Motor Co. • | $ | 4,112 | |||||
Banks — 2.5% | ||||||||
116 | PNC Financial Services Group, Inc. | 5,659 | ||||||
81 | Standard Chartered plc | 1,996 | ||||||
823 | Washington Mutual, Inc. Private Placement ⌂•† | 106 | ||||||
422 | Wells Fargo & Co. | 11,613 | ||||||
19,374 | ||||||||
Capital Goods — 6.3% | ||||||||
104 | Boeing Co. | 4,971 | ||||||
62 | Cummins, Inc. | 2,682 | ||||||
85 | General Dynamics Corp. | 5,311 | ||||||
406 | General Electric Co. | 5,787 | ||||||
117 | Illinois Tool Works, Inc. | 5,359 | ||||||
173 | Ingersoll-Rand plc | 5,475 | ||||||
51 | Lockheed Martin Corp. | 3,536 | ||||||
63 | Rockwell Collins, Inc. | 3,189 | ||||||
40 | Siemens AG ADR | 3,601 | ||||||
106 | Stanley Works | 4,803 | ||||||
188 | Textron, Inc. | 3,344 | ||||||
48,058 | ||||||||
Diversified Financials — 6.6% | ||||||||
170 | Ameriprise Financial, Inc. | 5,894 | ||||||
803 | Bank of America Corp. | 11,710 | ||||||
245 | Discover Financial Services, Inc. | 3,468 | ||||||
29 | Franklin Resources, Inc. | 3,066 | ||||||
45 | Goldman Sachs Group, Inc. | 7,658 | ||||||
269 | JP Morgan Chase & Co. | 11,236 | ||||||
420 | UBS AG ADR | 6,964 | ||||||
49,996 | ||||||||
Energy — 9.3% | ||||||||
71 | Anadarko Petroleum Corp. | 4,296 | ||||||
44 | BP plc ADR | 2,514 | ||||||
69 | Cameco Corp. | 1,872 | ||||||
131 | ConocoPhillips Holding Co. | 6,579 | ||||||
37 | Devon Energy Corp. | 2,381 | ||||||
45 | EOG Resources, Inc. | 3,642 | ||||||
310 | Exxon Mobil Corp. | 22,189 | ||||||
87 | Hess Corp. | 4,762 | ||||||
138 | OAO Gazprom Class S ADR | 3,330 | ||||||
83 | Occidental Petroleum Corp. | 6,290 | ||||||
107 | Petroleo Brasileiro S.A. ADR | 4,927 | ||||||
68 | Suncor Energy, Inc. | 2,261 | ||||||
266 | Williams Cos., Inc. | 5,014 | ||||||
70,057 | ||||||||
Food & Staples Retailing — 2.2% | ||||||||
176 | Kroger Co. | 4,078 | ||||||
102 | Sysco Corp. | 2,698 | ||||||
84 | Walgreen Co. | 3,166 | ||||||
130 | Wal-Mart Stores, Inc. | 6,473 | ||||||
16,415 | ||||||||
Food, Beverage & Tobacco — 4.3% | ||||||||
126 | Campbell Soup Co. | 3,985 | ||||||
126 | General Mills, Inc. | 8,306 | ||||||
241 | PepsiCo, Inc. | 14,599 | ||||||
186 | Unilever N.V. NY Shares ADR | 5,733 | ||||||
32,623 | ||||||||
Health Care Equipment & Services — 2.6% | ||||||||
76 | Cardinal Health, Inc. | 2,142 | ||||||
38 | CareFusion Corp. • | 846 | ||||||
13 | Intuitive Surgical, Inc. • | 3,252 | ||||||
157 | Medtronic, Inc. | 5,619 | ||||||
95 | St. Jude Medical, Inc. • | 3,251 | ||||||
104 | Varian Medical Systems, Inc. • | 4,262 | ||||||
19,372 | ||||||||
Insurance — 1.3% | ||||||||
104 | ACE Ltd. | 5,329 | ||||||
206 | Marsh & McLennan Cos., Inc. | 4,842 | ||||||
10,171 | ||||||||
Materials — 0.5% | ||||||||
116 | Cliff’s Natural Resources, Inc. | 4,108 | ||||||
Media — 1.5% | ||||||||
758 | Comcast Corp. Class A | 10,990 | ||||||
Pharmaceuticals, Biotechnology & Life Sciences — 6.7% | ||||||||
46 | Amgen, Inc. • | 2,482 | ||||||
257 | Daiichi Sankyo Co., Ltd. | 5,027 | ||||||
541 | Elan Corp. plc ADR • | 2,949 | ||||||
84 | Eli Lilly & Co. | 2,840 | ||||||
13 | Forest Laboratories, Inc. • | 346 | ||||||
40 | Johnson & Johnson | 2,362 | ||||||
320 | Merck & Co., Inc. | 9,894 | ||||||
617 | Pfizer, Inc. | 10,513 | ||||||
17 | Roche Holding AG | 2,646 | ||||||
237 | Shionogi & Co., Ltd. | 5,119 | ||||||
61 | UCB S.A. | 2,611 | ||||||
97 | Vertex Pharmaceuticals, Inc. • | 3,252 | ||||||
50,041 | ||||||||
Retailing — 4.6% | ||||||||
24 | Amazon.com, Inc. • | 2,893 | ||||||
91 | Best Buy Co., Inc. | 3,482 | ||||||
2,225 | Buck Holdings L.P. ⌂•† | 2,787 | ||||||
76 | Kohl’s Corp. • | 4,337 | ||||||
424 | Lowe’s Co., Inc. | 8,292 | ||||||
93 | Nordstrom, Inc. | 2,943 | ||||||
232 | Staples, Inc. | 5,023 | ||||||
97 | Target Corp. | 4,693 | ||||||
34,450 | ||||||||
Semiconductors & Semiconductor Equipment — 1.7% | ||||||||
93 | Lam Research Corp. • | 3,150 | ||||||
314 | Maxim Integrated Products, Inc. | 5,238 | ||||||
186 | Texas Instruments, Inc. | 4,361 | ||||||
12,749 | ||||||||
Software & Services — 6.1% | ||||||||
143 | Accenture plc | 5,306 | ||||||
174 | Automatic Data Processing, Inc. | 6,917 | ||||||
18 | Google, Inc. • | 9,704 | ||||||
569 | Microsoft Corp. | 15,787 | ||||||
306 | Western Union Co. | 5,566 | ||||||
155 | Yahoo!, Inc. • | 2,458 | ||||||
45,738 | ||||||||
Technology Hardware & Equipment — 6.4% | ||||||||
62 | Apple, Inc. • | 11,706 | ||||||
716 | Cisco Systems, Inc. • | 16,369 | ||||||
254 | Hewlett-Packard Co. | 12,069 | ||||||
198 | Qualcomm, Inc. | 8,216 | ||||||
48,360 | ||||||||
5
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 66.1% — (continued) | ||||||||||||
Transportation — 2.4% | ||||||||||||
858 | Delta Air Lines, Inc. • | $ | 6,125 | |||||||||
73 | FedEx Corp. | 5,299 | ||||||||||
130 | United Parcel Service, Inc. Class B | 6,968 | ||||||||||
18,392 | ||||||||||||
Utilities — 0.6% | ||||||||||||
94 | Exelon Corp. | 4,419 | ||||||||||
Total common stocks (cost $478,132) | $ | 499,425 | ||||||||||
WARRANTS — 0.0% | ||||||||||||
Banks — 0.0% | ||||||||||||
103 | Washington Mutual, Inc. Private Placement ⌂•† | $ | — | |||||||||
Total warrants (cost $—) | $ | — | ||||||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES — 0.5% | ||||||||||||
Finance and Insurance — 0.5% | ||||||||||||
Citibank Credit Card Issuance Trust | ||||||||||||
$ | 2,985 | 5.65%, 09/20/2019 | $ | 3,298 | ||||||||
Marriott Vacation Club Owner Trust | ||||||||||||
191 | 5.36%, 10/20/2028 ■ | 176 | ||||||||||
3,474 | ||||||||||||
Total asset & commercial mortgage backed securities (cost $3,159) | $ | 3,474 | ||||||||||
CORPORATE BONDS: INVESTMENT GRADE — 13.2% | ||||||||||||
Air Transportation — 0.4% | ||||||||||||
Continental Airlines, Inc. | ||||||||||||
$ | 755 | 5.98%, 04/19/2022 | $ | 732 | ||||||||
Southwest Airlines Co. | ||||||||||||
1,750 | 5.75%, 12/15/2016 | 1,734 | ||||||||||
654 | 6.15%, 08/01/2022 | 654 | ||||||||||
3,120 | ||||||||||||
Arts, Entertainment, and Recreation — 0.0% | ||||||||||||
News America Holdings, Inc. | ||||||||||||
220 | 5.65%, 08/15/2020 ■ | 228 | ||||||||||
Beverage and Tobacco Product Manufacturing — 0.1% | ||||||||||||
Anheuser-Busch InBev N.V. | ||||||||||||
600 | 7.75%, 01/15/2019 ■ | 699 | ||||||||||
Computer and Electronic Product Manufacturing — 0.1% | ||||||||||||
Dell, Inc. | ||||||||||||
520 | 5.88%, 06/15/2019 | 560 | ||||||||||
Electrical Equipment, Appliance Manufacturing — 0.2% | ||||||||||||
General Electric Co. | ||||||||||||
1,225 | 5.00%, 02/01/2013 | 1,305 | ||||||||||
Finance and Insurance — 8.1% | ||||||||||||
Ace INA Holdings, Inc. | ||||||||||||
125 | 5.88%, 06/15/2014 | 137 | ||||||||||
American Express Centurion Bank | ||||||||||||
1,200 | 6.00%, 09/13/2017 | 1,262 | ||||||||||
AXA Financial, Inc. | ||||||||||||
2,200 | 7.00%, 04/01/2028 | 2,144 | ||||||||||
Bank of America Corp. | ||||||||||||
3,000 | 5.42%, 03/15/2017 | 2,936 | ||||||||||
Berkshire Hathaway Finance Corp. | ||||||||||||
1,050 | 4.85%, 01/15/2015 | 1,138 | ||||||||||
Brandywine Operating Partnership | ||||||||||||
750 | 5.70%, 05/01/2017 | 676 | ||||||||||
1,000 | 6.00%, 04/01/2016 | 923 | ||||||||||
Capital One Bank | ||||||||||||
750 | 6.50%, 06/13/2013 ‡ | 800 | ||||||||||
Capital One Capital IV | ||||||||||||
300 | 6.75%, 02/17/2037 | 241 | ||||||||||
Citibank NA | ||||||||||||
5,000 | 1.88%, 06/04/2012 | 5,050 | ||||||||||
Citigroup, Inc. | ||||||||||||
1,600 | 6.00%, 10/31/2033 | 1,394 | ||||||||||
105 | 8.13%, 07/15/2039 | 122 | ||||||||||
Discover Financial Services, Inc. | ||||||||||||
1,245 | 6.45%, 06/12/2017 | 1,173 | ||||||||||
Eaton Vance Corp. | ||||||||||||
530 | 6.50%, 10/02/2017 | 562 | ||||||||||
Everest Reinsurance Holdings, Inc. | ||||||||||||
885 | 5.40%, 10/15/2014 | 876 | ||||||||||
Goldman Sachs Group, Inc. | ||||||||||||
1,000 | 5.30%, 02/14/2012 | 1,065 | ||||||||||
1,200 | 5.63%, 01/15/2017 | 1,228 | ||||||||||
Health Care Properties | ||||||||||||
2,035 | 6.00%, 01/30/2017 | 1,966 | ||||||||||
HSBC Finance Corp. | ||||||||||||
2,000 | 5.50%, 01/19/2016 | 2,081 | ||||||||||
International Lease Finance Corp. | ||||||||||||
2,200 | 5.00%, 09/15/2012 | 1,778 | ||||||||||
1,200 | 5.63%, 09/15/2010 | 1,136 | ||||||||||
Jackson National Life Insurance Co. | ||||||||||||
2,000 | 8.15%, 03/15/2027 ■ | 2,002 | ||||||||||
John Deere Capital Corp. | ||||||||||||
1,655 | 4.88%, 10/15/2010 | 1,717 | ||||||||||
JP Morgan Chase & Co. | ||||||||||||
675 | 3.70%, 01/20/2015 | 678 | ||||||||||
1,795 | 5.13%, 09/15/2014 | 1,900 | ||||||||||
Kimco Realty Corp. | ||||||||||||
1,550 | 5.78%, 03/15/2016 | 1,529 | ||||||||||
Liberty Mutual Group, Inc. | ||||||||||||
2,335 | 5.75%, 03/15/2014 ■ | 2,211 | ||||||||||
Liberty Property L.P. | ||||||||||||
315 | 6.63%, 10/01/2017 | 309 | ||||||||||
Merrill Lynch & Co., Inc. | ||||||||||||
2,000 | 5.00%, 02/03/2014 | 2,034 | ||||||||||
Morgan Stanley | ||||||||||||
2,650 | 5.38%, 10/15/2015 | 2,749 | ||||||||||
National City Corp. | ||||||||||||
125 | 6.88%, 05/15/2019 | 135 | ||||||||||
New England Mutual Life Insurance Co. | ||||||||||||
1,100 | 7.88%, 02/15/2024 ■ | 1,214 | ||||||||||
PNC Funding Corp. | ||||||||||||
625 | 5.40%, 06/10/2014 | 677 |
6
Shares or Principal Amount | Market Value ╪ | |||||||||||
CORPORATE BONDS: INVESTMENT GRADE — 13.2% — (continued) | ||||||||||||
Finance and Insurance — 8.1% — (continued) | ||||||||||||
Prologis Trust | ||||||||||||
$ | 1,500 | 5.63%, 11/15/2016 | $ | 1,380 | ||||||||
Prudential Funding LLC | ||||||||||||
2,000 | 6.75%, 09/15/2023 ■ | 1,993 | ||||||||||
Realty Income Corp. | ||||||||||||
965 | 6.75%, 08/15/2019 | 963 | ||||||||||
Republic New York Capital I | ||||||||||||
250 | 7.75%, 11/15/2006 | 239 | ||||||||||
Santander Central Hispano Issuances Ltd. | ||||||||||||
500 | 7.63%, 11/03/2009 | 500 | ||||||||||
Simon Property Group L.P. | ||||||||||||
3,100 | 6.10%, 05/01/2016 | 3,222 | ||||||||||
Sovereign Bancorp, Inc. | ||||||||||||
1,000 | 8.75%, 05/30/2018 | 1,146 | ||||||||||
Sovereign Capital Trust IV | ||||||||||||
1,500 | 7.91%, 06/13/2036 | 1,337 | ||||||||||
Svenska Handelsbanken AB | ||||||||||||
550 | 4.88%, 06/10/2014 ■ | 577 | ||||||||||
UnitedHealth Group, Inc. | ||||||||||||
500 | 5.50%, 11/15/2012 | 531 | ||||||||||
WEA Finance LLC | ||||||||||||
1,000 | 7.13%, 04/15/2018 ■ | 1,033 | ||||||||||
Wells Fargo Bank NA | ||||||||||||
2,500 | 6.45%, 02/01/2011 | 2,636 | ||||||||||
61,400 | ||||||||||||
Health Care and Social Assistance — 0.6% | ||||||||||||
CVS Corp. | ||||||||||||
1,550 | 6.13%, 08/15/2016 | 1,698 | ||||||||||
Express Scripts, Inc. | ||||||||||||
195 | 6.25%, 06/15/2014 | 215 | ||||||||||
Merck & Co., Inc. | ||||||||||||
400 | 4.00%, 06/30/2015 | 419 | ||||||||||
Schering-Plough Corp. | ||||||||||||
2,000 | 5.55%, 12/01/2013 | 2,199 | ||||||||||
4,531 | ||||||||||||
Information — 1.0% | ||||||||||||
BellSouth Telecommunications | ||||||||||||
250 | 7.00%, 12/01/2095 | 245 | ||||||||||
Comcast Corp. | ||||||||||||
1,600 | 5.90%, 03/15/2016 | 1,716 | ||||||||||
Fiserv, Inc. | ||||||||||||
1,250 | 6.13%, 11/20/2012 | 1,374 | ||||||||||
France Telecom S.A. | ||||||||||||
250 | 4.38%, 07/08/2014 | 264 | ||||||||||
Intuit, Inc. | ||||||||||||
1,500 | 5.40%, 03/15/2012 | 1,575 | ||||||||||
Oracle Corp. | ||||||||||||
550 | 6.13%, 07/08/2039 | 605 | ||||||||||
Telecom Italia Capital | ||||||||||||
565 | 7.00%, 06/04/2018 | 620 | ||||||||||
Time Warner Cable, Inc. | ||||||||||||
830 | 5.85%, 05/01/2017 | 872 | ||||||||||
Verizon Global Funding Corp. | ||||||||||||
250 | 7.25%, 12/01/2010 | 266 | ||||||||||
7,537 | ||||||||||||
Machinery Manufacturing — 0.1% | ||||||||||||
Xerox Corp. | ||||||||||||
1,000 | 5.50%, 05/15/2012 | 1,054 | ||||||||||
Motor Vehicle & Parts Manufacturing — 0.3% | ||||||||||||
DaimlerChrysler NA Holdings Corp. | ||||||||||||
1,975 | 6.50%, 11/15/2013 | 2,150 | ||||||||||
Petroleum and Coal Products Manufacturing — 0.3% | ||||||||||||
Atmos Energy Corp. | ||||||||||||
1,160 | 6.35%, 06/15/2017 | 1,259 | ||||||||||
Weatherford International Ltd. | ||||||||||||
1,000 | 5.95%, 06/15/2012 | 1,075 | ||||||||||
2,334 | ||||||||||||
Pipeline Transportation — 0.2% | ||||||||||||
Kinder Morgan Energy Partners L.P. | ||||||||||||
1,500 | 6.95%, 01/15/2038 | 1,607 | ||||||||||
Real Estate and Rental and Leasing — 0.3% | ||||||||||||
COX Communications, Inc. | ||||||||||||
2,000 | 5.45%, 12/15/2014 | 2,147 | ||||||||||
Retail Trade — 0.1% | ||||||||||||
Staples, Inc. | ||||||||||||
460 | 9.75%, 01/15/2014 | 557 | ||||||||||
Soap, Cleaning Compound and Toilet Manufacturing — 0.4% | ||||||||||||
Procter & Gamble Co. | ||||||||||||
2,101 | 9.36%, 01/01/2021 | 2,670 | ||||||||||
Utilities — 1.0% | ||||||||||||
Consolidated Edison Co. of NY | ||||||||||||
955 | 5.30%, 12/01/2016 | 1,001 | ||||||||||
Enel Finance International | ||||||||||||
805 | 6.80%, 09/15/2037 ■ | 912 | ||||||||||
Indianapolis Power and Light | ||||||||||||
1,500 | 6.60%, 06/01/2037 ■ | 1,592 | ||||||||||
MidAmerican Energy Co. | ||||||||||||
1,000 | 5.65%, 07/15/2012 | 1,087 | ||||||||||
MidAmerican Energy Holdings Co. | ||||||||||||
500 | 6.13%, 04/01/2036 | 534 | ||||||||||
Southern California Edison Co. | ||||||||||||
1,750 | 5.55%, 01/15/2037 | 1,829 | ||||||||||
Taqa Abu Dhabi National Energy Co. | ||||||||||||
695 | 5.88%, 10/27/2016 ■ | 696 | ||||||||||
7,651 | ||||||||||||
Total corporate bonds: investment grade (cost $97,179) | $ | 99,550 | ||||||||||
MUNICIPAL BONDS — 0.8% | ||||||||||||
General Obligations — 0.4% | ||||||||||||
California State Taxable, | ||||||||||||
$ | 700 | 6.20%, 10/01/2019 | $ | 702 | ||||||||
Chicago Metropolitan Water Reclamation Dist, | ||||||||||||
130 | 5.72%, 12/01/2038 | 137 | ||||||||||
Los Angeles USD, | ||||||||||||
800 | 5.75%, 07/01/2034 | 775 | ||||||||||
Oregon School Boards Association, Taxable Pension, | ||||||||||||
2,000 | 4.76%, 06/30/2028 | 1,758 | ||||||||||
3,372 | ||||||||||||
7
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
MUNICIPAL BONDS — 0.8% — (continued) | ||||||||||||
Higher Education (Univ., Dorms, etc.) — 0.1% | ||||||||||||
Curators University, MO, Taxable System Facs Rev, | ||||||||||||
$ | 415 | 5.96%, 11/01/2039 | $ | 443 | ||||||||
University of California, | ||||||||||||
370 | 5.77%, 05/15/2043 | 387 | ||||||||||
830 | ||||||||||||
Tax Allocation - 0.1% | ||||||||||||
Dallas, TX, Area Rapid Transit Taxable Sales Tax Rev, | ||||||||||||
425 | 6.00%, 12/01/2044 | 462 | ||||||||||
Transportation — 0.2% | ||||||||||||
Bay Area Toll Auth, | ||||||||||||
575 | 6.26%, 04/01/2049 ☼ | 581 | ||||||||||
Illinois State Toll Highway Auth, Taxable Rev, | ||||||||||||
70 | 6.18%, 01/01/2034 | 75 | ||||||||||
North Texas Tollway Auth Rev, | ||||||||||||
630 | 6.72%, 01/01/2049 | 686 | ||||||||||
PA New York and New Jersey, Taxable Rev, | ||||||||||||
185 | 5.86%, 12/01/2024 | 201 | ||||||||||
115 | 6.04%, 12/01/2029 | 120 | ||||||||||
1,663 | ||||||||||||
Total municipal bonds (cost $6,433) | $ | 6,327 | ||||||||||
U.S. GOVERNMENT AGENCIES — 0.7% | ||||||||||||
Government National Mortgage Association — 0.7% | ||||||||||||
$ | 1,217 | 6.00%, 11/20/2023 - 09/15/2034 | $ | 1,307 | ||||||||
1,462 | 6.50%, 04/15/2026 - 02/15/2035 | 1,580 | ||||||||||
1,557 | 7.00%, 11/15/2031 - 11/15/2033 | 1,709 | ||||||||||
255 | 8.00%, 12/15/2029 - 02/15/2031 | 294 | ||||||||||
4,890 | ||||||||||||
Total U.S. government agencies (cost $4,468) | $ | 4,890 | ||||||||||
U.S. GOVERNMENT SECURITIES — 15.4% | ||||||||||||
Other Direct Federal Obligations — 2.6% | ||||||||||||
Federal Financing Corporation — 2.3% | ||||||||||||
$ | 1,456 | 5.24%, 12/06/2013 | $ | 1,290 | ||||||||
2,220 | 5.25%, 12/27/2013 | 1,962 | ||||||||||
10,000 | 9.80%, 04/06/2018 | 13,941 | ||||||||||
17,193 | ||||||||||||
Federal Home Loan Bank — 0.3% | ||||||||||||
2,225 | 4.88%, 11/18/2011 | 2,398 | ||||||||||
19,591 | ||||||||||||
U.S. Treasury Securities — 12.8% | ||||||||||||
U.S. Treasury Bonds — 2.2% | ||||||||||||
3,700 | 4.38%, 02/15/2038 | 3,787 | ||||||||||
5,000 | 6.00%, 02/15/2026 | 6,116 | ||||||||||
5,775 | 6.25%, 08/15/2023 | 7,162 | ||||||||||
17,065 | ||||||||||||
U.S. Treasury Notes — 10.6% | ||||||||||||
31,160 | 1.00%, 07/31/2011 - 09/30/2011 | 31,285 | ||||||||||
6,000 | 1.38%, 05/15/2012 | 6,026 | ||||||||||
6,500 | 1.88%, 02/28/2014 | 6,454 | ||||||||||
9,500 | 2.38%, 08/31/2010 | 9,659 | ||||||||||
7,000 | 3.88%, 02/15/2013 - 05/15/2018 | 7,455 | ||||||||||
6,335 | 4.13%, 08/15/2010 | 6,523 | ||||||||||
5,000 | 4.25%, 08/15/2013 | 5,449 | ||||||||||
5,200 | 4.50%, 05/15/2017 | 5,697 | ||||||||||
1,277 | 4.75%, 05/31/2012 | 1,393 | ||||||||||
79,941 | ||||||||||||
97,006 | ||||||||||||
Total U.S. government securities (cost $111,387) | $ | 116,597 | ||||||||||
Total long-term investments (cost $700,758) | $ | 730,263 | ||||||||||
SHORT-TERM INVESTMENTS — 3.3% | ||||||||||||
Repurchase Agreements — 3.3% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,022, collateralized by GNMA 5.00%, 2039, value of $1,042) | ||||||||||||
$ | 1,022 | 0.08%, 10/30/2009 | $ | 1,022 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $5,987, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $6,107) | ||||||||||||
5,987 | 0.08%, 10/30/2009 | 5,987 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $6,669, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $6,803) | ||||||||||||
6,669 | 0.08%, 10/30/2009 | 6,669 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $68, collateralized by U.S. Treasury Note 2.75%, 2013, value of $68) | ||||||||||||
68 | 0.05%, 10/30/2009 | 68 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $11,556, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $11,787) | ||||||||||||
11,556 | 0.07%, 10/30/2009 | 11,556 | ||||||||||
25,302 | ||||||||||||
Total short-term investments (cost $25,302) | $ | 25,302 | ||||||||||
Total investments (cost $726,060)▲ | 100.0 | % | $ | 755,565 | ||||||||
Other assets and liabilities | — | % | 365 | |||||||||
Total net assets | 100.0 | % | $ | 755,930 | ||||||||
8
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 7.3% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $748,091 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 69,596 | ||
Unrealized Depreciation | (62,122 | ) | ||
Net Unrealized Appreciation | $ | 7,474 | ||
† | 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 October 31, 2009, was $2,893, which represents 0.38% of total net assets. This amount excludes securities that are principally traded in certain foreign markets and whose prices are 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 October 31, 2009, was $13,333, which represents 1.76% of total net assets. | |
☼ | The cost of securities purchased on a when-issued or delayed delivery basis at October 31, 2009 was $575. | |
⌂ | 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 | 103 | Washington Mutual, Inc. Private Placement Warrants | — | |||||||||
04/2008 | 823 | Washington Mutual, Inc. Private Placement | 7,200 |
The aggregate value of these securities at October 31, 2009 was $2,893 which represents 0.38% of total net assets. | ||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
9
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Asset & Commercial Mortgage Backed Securities | $ | 3,474 | $ | — | $ | 3,474 | $ | — | ||||||||
Common Stocks ‡ | 499,425 | 479,133 | 17,399 | 2,893 | ||||||||||||
Corporate Bonds: Investment Grade | 99,550 | — | 98,164 | 1,386 | ||||||||||||
Municipal Bonds | 6,327 | — | 6,327 | — | ||||||||||||
U.S. Government Agencies | 4,890 | — | 4,890 | — | ||||||||||||
U.S. Government Securities | 116,597 | 12,034 | 104,563 | — | ||||||||||||
Warrants ‡ | — | — | — | — | ||||||||||||
Short-Term Investments | 25,302 | — | 25,302 | — | ||||||||||||
Total | $ | 755,565 | $ | 491,167 | $ | 260,119 | $ | 4,279 | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. |
Balance as of | Change in | Balance as of | ||||||||||||||||||
October 31, | Realized Gain | Unrealized | October 31, | |||||||||||||||||
2008 | (Loss) | Appreciation | Net Sales | 2009 | ||||||||||||||||
Assets: | ||||||||||||||||||||
Asset & Commercial Mortgage Backed Securities | 1,244 | (713 | ) | 499 | * | (1,030 | ) | — | ||||||||||||
Common Stock | 2,168 | — | 725 | † | — | 2,893 | ||||||||||||||
Corporate Bonds | 1,066 | — | 343 | ‡ | (23 | ) | 1,386 | |||||||||||||
Total | $ | 4,478 | $ | (713 | ) | $ | 1,567 | $ | (1,053 | ) | $ | 4,279 | ||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $—. | |
† | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $725. | |
‡ | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $343. |
10
Assets: | ||||
Investments in securities, at market value (cost $726,060) | $ | 755,565 | ||
Receivables: | ||||
Investment securities sold | 31 | |||
Fund shares sold | 205 | |||
Dividends and interest | 2,945 | |||
Other assets | 61 | |||
Total assets | 758,807 | |||
Liabilities: | ||||
Bank overdraft — U.S. Dollars | 17 | |||
Payables: | ||||
Investment securities purchased | 575 | |||
Fund shares redeemed | 1,865 | |||
Investment management fees | 84 | |||
Distribution fees | 53 | |||
Accrued expenses | 283 | |||
Total liabilities | 2,877 | |||
Net assets | $ | 755,930 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 1,041,974 | |||
Accumulated undistributed net investment income | 613 | |||
Accumulated net realized loss on investments and foreign currency transactions | (316,162 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 29,505 | |||
Net assets | $ | 755,930 | ||
Shares authorized | 910,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 12.67/ $13.41 | ||
Shares outstanding | 45,813 | |||
Net assets | $ | 580,354 | ||
Class B: Net asset value per share | $ | 12.54 | ||
Shares outstanding | 5,882 | |||
Net assets | $ | 73,778 | ||
Class C: Net asset value per share | $ | 12.67 | ||
Shares outstanding | 7,804 | |||
Net assets | $ | 98,891 | ||
Class R3: Net asset value per share | $ | 12.81 | ||
Shares outstanding | 1 | |||
Net assets | $ | 13 | ||
Class R4: Net asset value per share | $ | 12.81 | ||
Shares outstanding | 100 | |||
Net assets | $ | 1,275 | ||
Class R5: Net asset value per share | $ | 12.82 | ||
Shares outstanding | 1 | |||
Net assets | $ | 9 | ||
Class Y: Net asset value per share | $ | 12.83 | ||
Shares outstanding | 126 | |||
Net assets | $ | 1,610 | ||
11
Investment Income: | ||||
Dividends | $ | 10,767 | ||
Interest | 11,662 | |||
Securities lending | 143 | |||
Less: Foreign tax withheld | (174 | ) | ||
Total investment income | 22,398 | |||
Expenses: | ||||
Investment management fees | 4,913 | |||
Administrative services fees | 1 | |||
Transfer agent fees | 2,448 | |||
Distribution fees | ||||
Class A | 1,370 | |||
Class B | 825 | |||
Class C | 950 | |||
Class R3 | — | |||
Class R4 | 2 | |||
Custodian fees | 13 | |||
Accounting services fees | 132 | |||
Registration and filing fees | 100 | |||
Board of Directors’ fees | 22 | |||
Audit fees | 25 | |||
Other expenses | 238 | |||
Total expenses (before waivers and fees paid indirectly) | 11,039 | |||
Expense waivers | (764 | ) | ||
Transfer agent fee waivers | (327 | ) | ||
Commission recapture | (63 | ) | ||
Custodian fee offset | (5 | ) | ||
Total waivers and fees paid indirectly | (1,159 | ) | ||
Total expenses, net | 9,880 | |||
Net Investment Income | 12,518 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (208,421 | ) | ||
Net realized loss on futures | (100 | ) | ||
Net realized gain on forward foreign currency contracts | 3,203 | |||
Net realized gain on other foreign currency transactions | 25 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (205,293 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 324,516 | |||
Net unrealized depreciation of forward foreign currency contracts | (3,211 | ) | ||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (28 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 321,277 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 115,984 | |||
Net Increase in Net Assets Resulting from Operations | $ | 128,502 | ||
12
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 12,518 | $ | 19,469 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (205,293 | ) | (103,462 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 321,277 | (369,100 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 128,502 | (453,093 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (14,365 | ) | (15,267 | ) | ||||
Class B | (1,546 | ) | (1,361 | ) | ||||
Class C | (1,715 | ) | (1,601 | ) | ||||
Class R3 | — | — | ||||||
Class R4 | (11 | ) | (2 | ) | ||||
Class R5 | — | — | ||||||
Class Y | (287 | ) | (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 | (17,924 | ) | (185,990 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (98,612 | ) | (39,453 | ) | ||||
Class B | (40,568 | ) | (52,862 | ) | ||||
Class C | (22,080 | ) | (15,999 | ) | ||||
Class R3 | 2 | 4 | ||||||
Class R4 | 975 | 114 | ||||||
Class R5 | — | 1 | ||||||
Class Y | (10,108 | ) | (182 | ) | ||||
Net decrease from capital share transactions | (170,391 | ) | (108,377 | ) | ||||
Net Decrease In Net Assets | (59,813 | ) | (747,460 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 815,743 | 1,563,203 | ||||||
End of period | $ | 755,930 | $ | 815,743 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 613 | $ | 3,036 | ||||
13
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
14
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Debt securities (other than short-term obligations) held by the Fund are valued using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Securities for which prices are not available from an independent pricing service may be 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 generally valued at amortized cost, which approximates market value. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s Valuation Time. | |||
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 and asked 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the securities that serve to collateralize the repurchase agreement |
16
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 October 31, 2009. | |||
f) | 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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had no outstanding forward foreign currency contracts as of October 31, 2009. | |||
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 quarterly. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 |
17
October 31, 2009
(000’s Omitted)
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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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. The Fund, as shown on the Schedule of Investments, had when-issued or delayed delivery securities as of October 31, 2009. |
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 — 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. |
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) | Additional Derivative Instrument(s) Information |
The volume of derivative activity was minimal during the year ended October 31, 2009. |
18
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | $ | — | $ | — | $ | (100 | ) | $ | — | $ | — | $ | (100 | ) | ||||||||||
Foreign exchange contracts | — | — | — | 3,203 | — | 3,203 | ||||||||||||||||||
Total | $ | — | $ | — | $ | (100 | ) | $ | 3,203 | $ | — | $ | 3,103 | |||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | (3,211 | ) | — | $ | (3,211 | ) | |||||||||||||||
Total | $ | — | $ | — | $ | — | $ | (3,211 | ) | $ | — | $ | (3,211 | ) | ||||||||||
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. |
Futures and Options Transactions — The Fund is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset 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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. As of October 31, 2009, there were no outstanding futures contracts. |
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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 the same underlying securities or |
19
October 31, 2009
(000’s Omitted)
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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. As of October 31, 2009, there were no outstanding purchased or written option contracts. |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 17,924 | $ | 120,978 | ||||
Long-Term Capital Gains * | — | 65,012 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
20
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 613 | ||
Accumulated Capital Losses * | (294,131 | ) | ||
Unrealized Appreciation † | 7,474 | |||
Total Accumulated Deficit | $ | (286,044 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase accumulated undistributed net investment income by $2,983 and decrease accumulated net realized loss on investments by $2,983. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 92,120 | ||
2017 | 202,011 | |||
Total | $ | 294,131 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
21
October 31, 2009
(000’s Omitted)
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.14 | % | 1.17 | % | 1.09 | % | 1.11 | % | 1.18 | % | ||||||||||
Class B Shares | 2.03 | 2.00 | 1.90 | 1.90 | 1.96 | |||||||||||||||
Class C Shares | 1.98 | 1.86 | 1.78 | 1.81 | 1.88 | |||||||||||||||
Class R3 Shares | 1.32 | 1.43 | 1.40 | * | ||||||||||||||||
Class R4 Shares | 1.12 | 1.11 | 1.05 | * | ||||||||||||||||
Class R5 Shares | 0.82 | 0.79 | 0.80 | * | ||||||||||||||||
Class Y Shares | 0.76 | 0.70 | 0.63 | 0.65 | 0.73 |
* | From December 22, 2006 (commencement of operations), through October 31, 2007. |
22
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $421 and contingent deferred sales charges of $105 from the Fund. |
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $46. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $2,135 for providing such services. These fees are accrued daily and paid monthly. |
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
23
October 31, 2009
(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 | 0.07 | % | 13.15 | % | ||||
Class B | 0.08 | 12.24 | ||||||
Class C | 0.07 | 12.36 | ||||||
Class Y | 0.07 | 13.65 |
Shares | ||||
Class R3 | 1 | |||
Class R5 | 1 |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 447,345 | ||
Sales Proceeds Excluding U.S. Government Obligations | 681,616 | |||
Cost of Purchases for U.S. Government Obligations | 82,188 | |||
Sales Proceeds for U.S. Government Obligations | 39,383 |
24
For the Year Ended October 31, 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 | 4,259 | 1,313 | (14,752 | ) | — | (9,180 | ) | 4,723 | 8,149 | (16,658 | ) | — | (3,786 | ) | ||||||||||||||||||||||||||
Amount | $ | 46,222 | $ | 13,936 | $ | (158,770 | ) | $ | — | $ | (98,612 | ) | $ | 68,922 | $ | 128,191 | $ | (236,566 | ) | $ | — | $ | (39,453 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 220 | 145 | (4,176 | ) | — | (3,811 | ) | 360 | 1,720 | (5,914 | ) | — | (3,834 | ) | ||||||||||||||||||||||||||
Amount | $ | 2,323 | $ | 1,493 | $ | (44,384 | ) | $ | — | $ | (40,568 | ) | $ | 5,188 | $ | 26,933 | $ | (84,983 | ) | $ | — | $ | (52,862 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 453 | 151 | (2,690 | ) | — | (2,086 | ) | 520 | 1,393 | (3,194 | ) | — | (1,281 | ) | ||||||||||||||||||||||||||
Amount | $ | 4,836 | $ | 1,574 | $ | (28,490 | ) | $ | — | $ | (22,080 | ) | $ | 7,233 | $ | 22,009 | $ | (45,241 | ) | $ | — | $ | (15,999 | ) | ||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 2 | $ | — | $ | — | $ | — | $ | 2 | $ | 3 | $ | 1 | $ | — | $ | — | $ | 4 | ||||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 101 | 1 | (12 | ) | — | 90 | 14 | — | (7 | ) | — | 7 | ||||||||||||||||||||||||||||
Amount | $ | 1,103 | $ | 11 | $ | (139 | ) | $ | — | $ | 975 | $ | 209 | $ | 8 | $ | (103 | ) | $ | — | $ | 114 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 71 | 27 | (1,010 | ) | — | (912 | ) | 120 | 157 | (305 | ) | — | (28 | ) | ||||||||||||||||||||||||||
Amount | $ | 786 | $ | 287 | $ | (11,181 | ) | $ | — | $ | (10,108 | ) | $ | 1,836 | $ | 2,498 | $ | (4,516 | ) | $ | — | $ | (182 | ) |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 1,452 | $ | 15,686 | |||||
For the Year Ended October 31, 2008 | 2,044 | $ | 30,041 |
25
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 10.80 | $ | 0.21 | $ | — | $ | 1.94 | $ | 2.15 | $ | (0.28 | ) | $ | — | $ | — | $ | (0.28 | ) | $ | 1.87 | $ | 12.67 | ||||||||||||||||||||
B | 10.69 | 0.12 | — | 1.92 | 2.04 | (0.19 | ) | — | — | (0.19 | ) | 1.85 | 12.54 | |||||||||||||||||||||||||||||||
C | 10.80 | 0.12 | — | 1.94 | 2.06 | (0.19 | ) | — | — | (0.19 | ) | 1.87 | 12.67 | |||||||||||||||||||||||||||||||
R3 | 10.92 | 0.18 | — | 1.97 | 2.15 | (0.26 | ) | — | — | (0.26 | ) | 1.89 | 12.81 | |||||||||||||||||||||||||||||||
R4 | 10.92 | 0.17 | — | 2.01 | 2.18 | (0.29 | ) | — | — | (0.29 | ) | 1.89 | 12.81 | |||||||||||||||||||||||||||||||
R5 | 10.93 | 0.24 | — | 1.97 | 2.21 | (0.32 | ) | — | — | (0.32 | ) | 1.89 | 12.82 | |||||||||||||||||||||||||||||||
Y | 10.93 | 0.28 | — | 1.95 | 2.23 | (0.33 | ) | — | — | (0.33 | ) | 1.90 | 12.83 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 18.34 | 0.15 | — | (5.70 | ) | (5.55 | ) | (0.11 | ) | (1.99 | ) | — | (2.10 | ) | (7.65 | ) | 10.69 | |||||||||||||||||||||||||||
C | 18.51 | 0.16 | — | (5.73 | ) | (5.57 | ) | (0.15 | ) | (1.99 | ) | — | (2.14 | ) | (7.71 | ) | 10.80 | |||||||||||||||||||||||||||
R3 | 18.70 | 0.21 | — | (5.78 | ) | (5.57 | ) | (0.22 | ) | (1.99 | ) | — | (2.21 | ) | (7.78 | ) | 10.92 | |||||||||||||||||||||||||||
R4 | 18.70 | 0.26 | — | (5.78 | ) | (5.52 | ) | (0.27 | ) | (1.99 | ) | — | (2.26 | ) | (7.78 | ) | 10.92 | |||||||||||||||||||||||||||
R5 | 18.71 | 0.31 | — | (5.79 | ) | (5.48 | ) | (0.31 | ) | (1.99 | ) | — | (2.30 | ) | (7.78 | ) | 10.93 | |||||||||||||||||||||||||||
Y | 18.71 | 0.33 | — | (5.80 | ) | (5.47 | ) | (0.32 | ) | (1.99 | ) | — | (2.31 | ) | (7.78 | ) | 10.93 | |||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 16.57 | 0.16 | 0.02 | 1.84 | 2.02 | (0.16 | ) | (0.09 | ) | — | (0.25 | ) | 1.77 | 18.34 | ||||||||||||||||||||||||||||||
C | 16.73 | 0.18 | 0.01 | 1.87 | 2.06 | (0.19 | ) | (0.09 | ) | — | (0.28 | ) | 1.78 | 18.51 | ||||||||||||||||||||||||||||||
R3(g) | 17.24 | 0.21 | — | 1.44 | 1.65 | (0.19 | ) | — | — | (0.19 | ) | 1.46 | 18.70 | |||||||||||||||||||||||||||||||
R4(g) | 17.24 | 0.25 | — | 1.44 | 1.69 | (0.23 | ) | — | — | (0.23 | ) | 1.46 | 18.70 | |||||||||||||||||||||||||||||||
R5(g) | 17.24 | 0.31 | — | 1.43 | 1.74 | (0.27 | ) | — | — | (0.27 | ) | 1.47 | 18.71 | |||||||||||||||||||||||||||||||
Y | 16.91 | 0.38 | 0.01 | 1.89 | 2.28 | (0.39 | ) | (0.09 | ) | — | (0.48 | ) | 1.80 | 18.71 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 15.34 | 0.31 | — | 1.38 | 1.69 | (0.29 | ) | — | — | (0.29 | ) | 1.40 | 16.74 | |||||||||||||||||||||||||||||||
B | 15.19 | 0.18 | — | 1.37 | 1.55 | (0.17 | ) | — | — | (0.17 | ) | 1.38 | 16.57 | |||||||||||||||||||||||||||||||
C | 15.34 | 0.19 | — | 1.38 | 1.57 | (0.18 | ) | — | — | (0.18 | ) | 1.39 | 16.73 | |||||||||||||||||||||||||||||||
Y | 15.50 | 0.38 | — | 1.40 | 1.78 | (0.37 | ) | — | — | (0.37 | ) | 1.41 | 16.91 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
B | 14.43 | 0.14 | — | 0.79 | 0.93 | (0.17 | ) | — | — | (0.17 | ) | 0.76 | 15.19 | |||||||||||||||||||||||||||||||
C | 14.56 | 0.16 | — | 0.80 | 0.96 | (0.18 | ) | — | — | (0.18 | ) | 0.78 | 15.34 | |||||||||||||||||||||||||||||||
Y | 14.72 | 0.33 | — | 0.81 | 1.14 | (0.36 | ) | — | — | (0.36 | ) | 0.78 | 15.50 |
(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) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Not annualized. | |
(i) | Annualized. |
26
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Net | |||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Investment Income | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | to Average Net | Portfolio | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Turnover Rate(d) | ||||||||||||||||||||||
20.47 | % | $ | 580,354 | 1.32 | % | 1.15 | % | 1.15 | % | 1.90 | % | 73 | % | |||||||||||||||
19.42 | 73,778 | 2.25 | 2.04 | 2.04 | 1.06 | — | ||||||||||||||||||||||
19.46 | 98,891 | 1.98 | 1.98 | 1.98 | 1.08 | — | ||||||||||||||||||||||
20.20 | 13 | 1.84 | 1.32 | 1.32 | 1.65 | — | ||||||||||||||||||||||
20.47 | 1,275 | 1.13 | 1.13 | 1.13 | 1.61 | — | ||||||||||||||||||||||
20.83 | 9 | 0.85 | 0.83 | 0.83 | 2.18 | — | ||||||||||||||||||||||
20.98 | 1,610 | 0.76 | 0.76 | 0.76 | 2.49 | — | ||||||||||||||||||||||
(33.24 | ) | 593,816 | 1.18 | 1.18 | 1.18 | 1.75 | 79 | |||||||||||||||||||||
(33.80 | ) | 103,632 | 2.03 | 2.00 | 2.00 | 0.93 | — | |||||||||||||||||||||
(33.68 | ) | 106,819 | 1.87 | 1.87 | 1.87 | 1.06 | — | |||||||||||||||||||||
(33.39 | ) | 9 | 1.57 | 1.43 | 1.43 | 1.49 | — | |||||||||||||||||||||
(33.16 | ) | 113 | 1.11 | 1.11 | 1.11 | 1.80 | — | |||||||||||||||||||||
(32.96 | ) | 7 | 0.79 | 0.79 | 0.79 | 2.13 | — | |||||||||||||||||||||
(32.91 | ) | 11,347 | 0.70 | 0.70 | 0.70 | 2.22 | — | |||||||||||||||||||||
13.23 | (f) | 1,088,361 | 1.15 | 1.10 | 1.10 | 1.67 | 84 | |||||||||||||||||||||
12.32 | (f) | 248,020 | 1.96 | 1.91 | 1.91 | 0.85 | — | |||||||||||||||||||||
12.44 | (f) | 206,799 | 1.83 | 1.78 | 1.78 | 0.98 | — | |||||||||||||||||||||
9.62 | (h) | 11 | 1.45 | (i) | 1.40 | (i) | 1.40 | (i) | 1.38 | (i) | — | |||||||||||||||||
9.88 | (h) | 53 | 1.11 | (i) | 1.06 | (i) | 1.06 | (i) | 1.68 | (i) | — | |||||||||||||||||
10.17 | (h) | 11 | 0.85 | (i) | 0.80 | (i) | 0.80 | (i) | 1.98 | (i) | — | |||||||||||||||||
13.73 | (f) | 19,948 | 0.69 | 0.64 | 0.64 | 2.13 | — | |||||||||||||||||||||
11.16 | 1,110,324 | 1.17 | 1.12 | 1.12 | 1.86 | 99 | ||||||||||||||||||||||
10.25 | 341,772 | 1.96 | 1.91 | 1.91 | 1.07 | — | ||||||||||||||||||||||
10.32 | 219,580 | 1.87 | 1.82 | 1.82 | 1.16 | — | ||||||||||||||||||||||
11.63 | 17,710 | 0.71 | 0.66 | 0.66 | 2.32 | — | ||||||||||||||||||||||
7.30 | 1,222,944 | 1.21 | 1.19 | 1.19 | 1.73 | 66 | ||||||||||||||||||||||
6.48 | 437,462 | 1.99 | 1.98 | 1.98 | 0.95 | — | ||||||||||||||||||||||
6.63 | 253,605 | 1.91 | 1.89 | 1.89 | 1.06 | — | ||||||||||||||||||||||
7.78 | 15,342 | 0.75 | 0.74 | 0.74 | 2.13 | — |
27
Report of Independent Registered Public Accounting Firm |
The Hartford Mutual Funds, Inc.
December 15, 2009
28
29
30
31
U.S. Treasury* | 9.00 | % | ||
Other Direct Federal Obligations* | 5.00 | % | ||
Other Securities | 86.00 | % | ||
Total | 100.00 | % | ||
DRD† | 55.00 | % | ||
QDI‡ | 65.00 | % | ||
QII§ | 40.00 | % |
* | The income received from federal obligations. | |
† | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
‡ | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. | |
§ | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.284 | N/A | N/A | 0.284 | ||||||||||||
Class B | 0.185 | N/A | N/A | 0.185 | ||||||||||||
Class C | 0.190 | N/A | N/A | 0.190 | ||||||||||||
Class R3 | 0.264 | N/A | N/A | 0.264 | ||||||||||||
Class R4 | 0.288 | N/A | N/A | 0.288 | ||||||||||||
Class R5 | 0.323 | N/A | N/A | 0.323 | ||||||||||||
Class Y | 0.328 | N/A | N/A | 0.328 |
32
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | 2009 through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,184.30 | $ | 6.44 | $ | 1,000.00 | $ | 1,019.31 | $ | 5.96 | 1 .17 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,178.90 | $ | 11.04 | $ | 1,000.00 | $ | 1,015.07 | $ | 10.21 | 2 .01 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,179.50 | $ | 10.66 | $ | 1,000.00 | $ | 1,015.43 | $ | 9.86 | 1 .94 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,183.50 | $ | 6.88 | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1 .25 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,185.30 | $ | 6.17 | $ | 1,000.00 | $ | 1,019.56 | $ | 5.70 | 1 .12 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,185.90 | $ | 4.57 | $ | 1,000.00 | $ | 1,021.02 | $ | 4.23 | 0 .83 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,187.10 | $ | 4.13 | $ | 1,000.00 | $ | 1,021.42 | $ | 3.82 | 0 .75 | 184 | 365 |
33
34
35
36
37
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 |
The Hartford Balanced Allocation Fund inception 05/28/2004 (subadvised by Hartford Investment Management Company) | Investment objective – Seeks long-term capital appreciation and income. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
Balanced Allocation A# | 18.01 | % | 2.89 | % | 3.25 | % | ||||||
Balanced Allocation A## | 11.52 | % | 1.74 | % | 2.18 | % | ||||||
Balanced Allocation B# | 17.15 | % | 2.11 | % | 2.47 | % | ||||||
Balanced Allocation B## | 12.15 | % | 1.76 | % | 2.30 | % | ||||||
Balanced Allocation C# | 17.07 | % | 2.12 | % | 2.47 | % | ||||||
Balanced Allocation C## | 16.07 | % | 2.12 | % | 2.47 | % | ||||||
Balanced Allocation I# | 18.39 | % | 3.09 | % | 3.43 | % | ||||||
Balanced Allocation R3# | 17.52 | % | 2.63 | % | 3.01 | % | ||||||
Balanced Allocation R4# | 18.04 | % | 2.87 | % | 3.23 | % | ||||||
Balanced Allocation R5# | 18.37 | % | 3.04 | % | 3.39 | % | ||||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 5.05 | % | 5.52 | % | ||||||
S&P 500 Index | 9.78 | % | 0.33 | % | 0.59 | % |
# | 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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
Powershares Emerging Markets Sovereign Debt Portfolio ETF | 0.1 | % | ||
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 | 5.1 | |||
The Hartford Disciplined Equity Fund, Class Y | 1.7 | |||
The Hartford Dividend and Growth Fund, Class Y | 1.8 | |||
The Hartford Equity Income Fund, Class Y | 2.4 | |||
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 | 4.8 | |||
The Hartford Growth Fund, Class Y | 1.5 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.0 | |||
The Hartford High Yield Fund, Class Y | 0.4 | |||
The Hartford Income Fund, Class Y | 9.3 | |||
The Hartford Inflation Plus Fund, Class Y | 8.4 | |||
The Hartford International Opportunities Fund, Class Y | 4.5 | |||
The Hartford International Small Company Fund, Class Y | 2.8 | |||
The Hartford MidCap Fund, Class Y | 1.5 | |||
The Hartford Select MidCap Value Fund, Class Y | 1.1 | |||
The Hartford Select SmallCap Value Fund, Class Y | 1.8 | |||
The Hartford Short Duration Fund, Class Y | 6.9 | |||
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 | 10.0 | |||
The Hartford Value Fund, Class Y | 10.7 | |||
Other Assets and Liabilities | 0.1 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 98.1% | ||||||||||||
EQUITY FUNDS — 58.3% | ||||||||||||
3,812 | The Hartford Capital Appreciation Fund, Class Y | $ | 115,263 | |||||||||
3,645 | The Hartford Capital Appreciation II Fund, Class Y• | 39,948 | ||||||||||
1,211 | The Hartford Disciplined Equity Fund, Class Y | 13,029 | ||||||||||
843 | The Hartford Dividend and Growth Fund, Class Y | 13,701 | ||||||||||
1,739 | The Hartford Equity Income Fund, Class Y | 18,800 | ||||||||||
100 | The Hartford Fundamental Growth Fund, Class Y• | 938 | ||||||||||
2,808 | The Hartford Global Growth Fund, Class Y• | 37,403 | ||||||||||
822 | The Hartford Growth Fund, Class Y• | 11,630 | ||||||||||
704 | The Hartford Growth Opportunities Fund, Class Y• | 15,204 | ||||||||||
2,651 | The Hartford International Opportunities Fund, Class Y | 34,652 | ||||||||||
2,015 | The Hartford International Small Company Fund, Class Y | 21,945 | ||||||||||
654 | The Hartford MidCap Fund, Class Y• | 11,535 | ||||||||||
1,068 | The Hartford Select MidCap Value Fund, Class Y | 8,215 | ||||||||||
1,752 | The Hartford Select SmallCap Value Fund, Class Y | 13,945 | ||||||||||
862 | The Hartford Small Company Fund, Class Y• | 12,961 | ||||||||||
8,759 | The Hartford Value Fund, Class Y | 83,645 | ||||||||||
Total equity funds (cost $512,802) | $ | 452,814 | ||||||||||
FIXED INCOME FUNDS — 39.8% | ||||||||||||
3,606 | The Hartford Floating Rate Fund, Class Y | $ | 29,892 | |||||||||
502 | The Hartford High Yield Fund, Class Y | 3,379 | ||||||||||
7,571 | The Hartford Income Fund, Class Y | 72,080 | ||||||||||
5,716 | The Hartford Inflation Plus Fund, Class Y | 65,339 | ||||||||||
5,589 | The Hartford Short Duration Fund, Class Y | 53,652 | ||||||||||
862 | The Hartford Strategic Income Fund, Class Y | 7,493 | ||||||||||
7,548 | The Hartford Total Return Bond Fund, Class Y | 78,050 | ||||||||||
Total fixed income funds (cost $313,764) | $ | 309,885 | ||||||||||
Total investments in affiliated investment companies (cost $826,566) | $ | 762,699 | ||||||||||
EXCHANGE TRADED FUNDS — 1.8% | ||||||||||||
22 | Powershares Emerging Markets Sovereign Debt Portfolio ETF | $ | 575 | |||||||||
172 | SPDR DJ Wilshire International Real Estate ETF | 5,932 | ||||||||||
178 | SPDR DJ Wilshire REIT ETF | 7,734 | ||||||||||
Total exchange traded funds (cost $13,357) | $ | 14,241 | ||||||||||
Total long-term investments (cost $839,923) | $ | 776,940 | ||||||||||
SHORT-TERM INVESTMENTS — 0.0% | ||||||||||||
Investment Pools and Funds — 0.0% | ||||||||||||
3 | State Street Bank Money Market Fund | $ | 3 | |||||||||
Total short-term investments (cost $3) | $ | 3 | ||||||||||
Total investments (cost $839,926)▲ | 99.9 | % | $ | 776,943 | ||||||||
Other assets and liabilities | 0.1 | % | 886 | |||||||||
Total net assets | 100.0 | % | $ | 777,829 | ||||||||
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $842,561 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 25,532 | ||
Unrealized Depreciation | (91,150 | ) | ||
Net Unrealized Depreciation | $ | (65,618 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 762,699 | $ | 762,699 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 14,241 | 14,241 | — | — | ||||||||||||
Short-Term Investments | 3 | 3 | — | — | ||||||||||||
Total | $ | 776,943 | $ | 776,943 | $ | — | $ | — | ||||||||
5
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $13,360) | $ | 14,244 | ||
Investments in underlying affiliated funds, at market value (cost $826,566) | 762,699 | |||
Receivables: | ||||
Fund shares sold | 1,303 | |||
Dividends and interest | 1,084 | |||
Other assets | 51 | |||
Total assets | 779,381 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 75 | |||
Fund shares redeemed | 1,253 | |||
Investment management fees | 17 | |||
Distribution fees | 65 | |||
Accrued expenses | 142 | |||
Total liabilities | 1,552 | |||
Net assets | $ | 777,829 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 912,619 | |||
Accumulated undistributed net investment income | 1,556 | |||
Accumulated net realized loss on investments | (73,363 | ) | ||
Unrealized depreciation of investments | (62,983 | ) | ||
Net assets | $ | 777,829 | ||
Shares authorized | 400,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 9.79/$10.36 | ||
Shares outstanding | 49,387 | |||
Net assets | $ | 483,316 | ||
Class B: Net asset value per share | $ | 9.76 | ||
Shares outstanding | 9,749 | |||
Net assets | $ | 95,125 | ||
Class C: Net asset value per share | $ | 9.75 | ||
Shares outstanding | 17,359 | |||
Net assets | $ | 169,306 | ||
Class I: Net asset value per share | $ | 9.78 | ||
Shares outstanding | 213 | |||
Net assets | $ | 2,079 | ||
Class R3: Net asset value per share | $ | 9.74 | ||
Shares outstanding | 142 | |||
Net assets | $ | 1,381 | ||
Class R4: Net asset value per share | $ | 9.78 | ||
Shares outstanding | 1,382 | |||
Net assets | $ | 13,518 | ||
Class R5: Net asset value per share | $ | 9.79 | ||
Shares outstanding | 1,339 | |||
Net assets | $ | 13,104 | ||
6
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 507 | ||
Dividends from underlying affiliated funds | 18,938 | |||
Interest | 1 | |||
Total investment income | 19,446 | |||
Expenses: | ||||
Investment management fees | 948 | |||
Administrative services fees | 27 | |||
Transfer agent fees | 1,011 | |||
Distribution fees | ||||
Class A | 1,089 | |||
Class B | 878 | |||
Class C | 1,522 | |||
Class R3 | 3 | |||
Class R4 | 29 | |||
Custodian fees | 1 | |||
Accounting services fees | 84 | |||
Registration and filing fees | 121 | |||
Board of Directors’ fees | 19 | |||
Audit fees | 27 | |||
Other expenses | 166 | |||
Total expenses (before waivers) | 5,925 | |||
Expense waivers | (36 | ) | ||
Total waivers | (36 | ) | ||
Total expenses, net | 5,889 | |||
Net Investment Income | 13,557 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (58,281 | ) | ||
Net Realized Loss on Investments | (58,281 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 159,504 | |||
Net Changes in Unrealized Appreciation of Investments | 159,504 | |||
Net Gain on Investments | 101,223 | |||
Net Increase in Net Assets Resulting from Operations | $ | 114,780 | ||
7
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 13,557 | $ | 18,094 | ||||
Net realized gain (loss) on investments | (58,281 | ) | 3,302 | |||||
Net unrealized appreciation (depreciation) of investments | 159,504 | (325,274 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 114,780 | (303,878 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (9,311 | ) | (24,256 | ) | ||||
Class B | (1,200 | ) | (4,239 | ) | ||||
Class C | (2,130 | ) | (7,330 | ) | ||||
Class I | (39 | ) | (81 | ) | ||||
Class R3 | (7 | ) | (12 | ) | ||||
Class R4 | (228 | ) | (198 | ) | ||||
Class R5 | (199 | ) | (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 | (13,114 | ) | (79,137 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (20,268 | ) | 70,044 | |||||
Class B | (10,182 | ) | 8,431 | |||||
Class C | (12,291 | ) | 22,711 | |||||
Class I | (322 | ) | 2,197 | |||||
Class R3 | 922 | 511 | ||||||
Class R4 | 3,145 | 8,935 | ||||||
Class R5 | 6,942 | 4,818 | ||||||
Net increase (decrease) from capital share transactions | (32,054 | ) | 117,647 | |||||
Net Increase (Decrease) In Net Assets | 69,612 | (265,368 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 708,217 | 973,585 | ||||||
End of period | $ | 777,829 | $ | 708,217 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 1,556 | $ | 1,113 | ||||
8
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 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 September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 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 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. |
9
October 31, 2009
(000’s Omitted)
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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. | ||
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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. 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 Valuation Time. 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 are 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable representation of exit price. |
10
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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may use 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 October 31, 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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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. |
11
October 31, 2009
(000’s Omitted)
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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) – Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings – 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 13,114 | $ | 38,476 | ||||
Long-Term Capital Gains * | — | 40,661 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 1,556 | ||
Accumulated Capital Losses * | (70,728 | ) | ||
Unrealized Depreciation † | (65,618 | ) | ||
Total Accumulated Deficit | $ | (134,790 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts – The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. |
12
e) | Capital Loss Carryforward – At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 14,074 | ||
2017 | 56,654 | |||
Total | $ | 70,728 | ||
e) | Accounting for Uncertainty in Income Taxes – Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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. |
13
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $2,374 and contingent deferred sales charges of $327 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $74. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $1,012 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 117,973 | ||
Sales Proceeds Excluding U.S. Government Obligations | 149,098 |
14
6. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 12,768 | 1,095 | (16,382 | ) | — | (2,519 | ) | 14,186 | 4,158 | (12,888 | ) | — | 5,456 | |||||||||||||||||||||||||||
Amount | $ | 108,578 | $ | 8,990 | $ | (137,836 | ) | $ | — | $ | (20,268 | ) | $ | 158,195 | $ | 49,061 | $ | (137,212 | ) | $ | — | $ | 70,044 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,310 | 143 | (2,687 | ) | — | (1,234 | ) | 2,209 | 811 | (2,413 | ) | — | 607 | |||||||||||||||||||||||||||
Amount | $ | 10,936 | $ | 1,142 | $ | (22,260 | ) | $ | — | $ | (10,182 | ) | $ | 24,579 | $ | 9,630 | $ | (25,778 | ) | $ | — | $ | 8,431 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,706 | 232 | (5,539 | ) | — | (1,601 | ) | 5,758 | 1,236 | (5,278 | ) | — | 1,716 | |||||||||||||||||||||||||||
Amount | $ | 31,608 | $ | 1,861 | $ | (45,760 | ) | $ | — | $ | (12,291 | ) | $ | 64,145 | $ | 14,655 | $ | (56,089 | ) | $ | — | $ | 22,711 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 142 | 5 | (198 | ) | — | (51 | ) | 259 | 8 | (74 | ) | — | 193 | |||||||||||||||||||||||||||
Amount | $ | 1,292 | $ | 37 | $ | (1,651 | ) | $ | — | $ | (322 | ) | $ | 2,909 | $ | 96 | $ | (808 | ) | $ | — | $ | 2,197 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 133 | 1 | (34 | ) | — | 100 | 160 | 1 | (128 | ) | — | 33 | ||||||||||||||||||||||||||||
Amount | $ | 1,217 | $ | 6 | $ | (301 | ) | $ | — | $ | 922 | $ | 1,774 | $ | 12 | $ | (1,275 | ) | $ | — | $ | 511 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 873 | 28 | (526 | ) | — | 375 | 1,084 | 30 | (312 | ) | — | 802 | ||||||||||||||||||||||||||||
Amount | $ | 7,318 | $ | 228 | $ | (4,401 | ) | $ | — | $ | 3,145 | $ | 11,920 | $ | 343 | $ | (3,328 | ) | $ | — | $ | 8,935 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,104 | 24 | (277 | ) | — | 851 | 552 | 11 | (130 | ) | — | 433 | ||||||||||||||||||||||||||||
Amount | $ | 8,971 | $ | 199 | $ | (2,228 | ) | $ | — | $ | 6,942 | $ | 6,087 | $ | 119 | $ | (1,388 | ) | $ | — | $ | 4,818 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 175 | $ | 1,493 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
8. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.48 | $ | 0.19 | $ | — | $ | 1.30 | $ | 1.49 | $ | (0.18 | ) | $ | — | $ | — | $ | (0.18 | ) | $ | 1.31 | $ | 9.79 | ||||||||||||||||||||
B | 8.45 | 0.12 | — | 1.30 | 1.42 | (0.11 | ) | — | — | (0.11 | ) | 1.31 | 9.76 | |||||||||||||||||||||||||||||||
C | 8.45 | 0.12 | — | 1.30 | 1.42 | (0.12 | ) | — | — | (0.12 | ) | 1.30 | 9.75 | |||||||||||||||||||||||||||||||
I | 8.47 | 0.24 | — | 1.28 | 1.52 | (0.21 | ) | — | — | (0.21 | ) | 1.31 | 9.78 | |||||||||||||||||||||||||||||||
R3 | 8.44 | 0.15 | — | 1.30 | 1.45 | (0.15 | ) | — | — | (0.15 | ) | 1.30 | 9.74 | |||||||||||||||||||||||||||||||
R4 | 8.47 | 0.19 | — | 1.30 | 1.49 | (0.18 | ) | — | — | (0.18 | ) | 1.31 | 9.78 | |||||||||||||||||||||||||||||||
R5 | 8.48 | 0.21 | — | 1.31 | 1.52 | (0.21 | ) | — | — | (0.21 | ) | 1.31 | 9.79 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 13.06 | 0.16 | — | (3.81 | ) | (3.65 | ) | (0.38 | ) | (0 .58 | ) | — | (0.96 | ) | (4.61 | ) | 8.45 | |||||||||||||||||||||||||||
C | 13.06 | 0.17 | — | (3.81 | ) | (3.64 | ) | (0.39 | ) | (0 .58 | ) | — | (0.97 | ) | (4.61 | ) | 8.45 | |||||||||||||||||||||||||||
I | 13.09 | 0.33 | — | (3.86 | ) | (3.53 | ) | (0.51 | ) | (0 .58 | ) | — | (1.09 | ) | (4.62 | ) | 8.47 | |||||||||||||||||||||||||||
R3 | 13.08 | 0.26 | — | (3.88 | ) | (3.62 | ) | (0.44 | ) | (0 .58 | ) | — | (1.02 | ) | (4.64 | ) | 8.44 | |||||||||||||||||||||||||||
R4 | 13.10 | 0.38 | — | (3.96 | ) | (3.58 | ) | (0.47 | ) | (0 .58 | ) | — | (1.05 | ) | (4.63 | ) | 8.47 | |||||||||||||||||||||||||||
R5 | 13.10 | 0.41 | — | (3.95 | ) | (3.54 | ) | (0.50 | ) | (0 .58 | ) | — | (1.08 | ) | (4.62 | ) | 8.48 | |||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 11.98 | 0.18 | — | 1.44 | 1.62 | (0.27 | ) | (0 .27 | ) | — | (0.54 | ) | 1.08 | 13.06 | ||||||||||||||||||||||||||||||
C | 11.98 | 0.18 | — | 1.44 | 1.62 | (0.27 | ) | (0 .27 | ) | — | (0.54 | ) | 1.08 | 13.06 | ||||||||||||||||||||||||||||||
I | 12.00 | 0.26 | — | 1.50 | 1.76 | (0.40 | ) | (0 .27 | ) | — | (0.67 | ) | 1.09 | 13.09 | ||||||||||||||||||||||||||||||
R3(e) | 11.89 | 0.08 | — | 1.25 | 1.33 | (0.14 | ) | — | — | (0.14 | ) | 1.19 | 13.08 | |||||||||||||||||||||||||||||||
R4(e) | 11.89 | 0.14 | — | 1.23 | 1.37 | (0.16 | ) | — | — | (0.16 | ) | 1.21 | 13.10 | |||||||||||||||||||||||||||||||
R5(e) | 11.89 | 0.14 | — | 1.25 | 1.39 | (0.18 | ) | — | — | (0.18 | ) | 1.21 | 13.10 | |||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 10.92 | 0.10 | — | 1.11 | 1.21 | (0.13 | ) | (0 .02 | ) | — | (0.15 | ) | 1.06 | 11.98 | ||||||||||||||||||||||||||||||
C | 10.92 | 0.11 | — | 1.11 | 1.22 | (0.14 | ) | (0 .02 | ) | — | (0.16 | ) | 1.06 | 11.98 | ||||||||||||||||||||||||||||||
I(h) | 11.66 | 0.05 | — | 0.34 | 0.39 | (0.05 | ) | — | — | (0.05 | ) | 0.34 | 12.00 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.30 | 0.13 | — | 0.64 | 0.77 | (0.12 | ) | — | — | (0.12 | ) | 0.65 | 10.95 | |||||||||||||||||||||||||||||||
B | 10.28 | 0.06 | — | 0.62 | 0.68 | (0.04 | ) | — | — | (0.04 | ) | 0.64 | 10.92 | |||||||||||||||||||||||||||||||
C | 10.28 | 0.06 | — | 0.62 | 0.68 | (0.04 | ) | — | — | (0.04 | ) | 0.64 | 10.92 |
(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) | Commenced operations on December 22, 2006. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on August 31, 2006. |
16
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||
18.01 | % | $ | 483,316 | 0.58 | % | 0.58 | % | 0.58 | % | 2.20 | % | 17 | % | |||||||||||||||
17.15 | 95,125 | 1.42 | 1.38 | 1.38 | 1.41 | – | ||||||||||||||||||||||
17.07 | 169,306 | 1.34 | 1.34 | 1.34 | 1.46 | – | ||||||||||||||||||||||
18.39 | 2,079 | 0.28 | 0.28 | 0.28 | 3.01 | – | ||||||||||||||||||||||
17.52 | 1,381 | 0.96 | 0.96 | 0.96 | 1.47 | – | ||||||||||||||||||||||
18.04 | 13,518 | 0.59 | 0.59 | 0.59 | 2.08 | – | ||||||||||||||||||||||
18.37 | 13,104 | 0.29 | 0.29 | 0.29 | 2.22 | – | ||||||||||||||||||||||
(29.35 | ) | 439,955 | 0.53 | 0.53 | 0.53 | 2.23 | 18 | |||||||||||||||||||||
(29.95 | ) | 92,829 | 1.35 | 1.35 | 1.35 | 1.47 | – | |||||||||||||||||||||
(29.91 | ) | 160,167 | 1.29 | 1.29 | 1.29 | 1.49 | – | |||||||||||||||||||||
(29.15 | ) | 2,238 | 0.22 | 0.22 | 0.22 | 1.59 | – | |||||||||||||||||||||
(29.74 | ) | 358 | 0.92 | 0.92 | 0.92 | 0.86 | – | |||||||||||||||||||||
(29.44 | ) | 8,535 | 0.59 | 0.59 | 0.59 | 1.54 | – | |||||||||||||||||||||
(29.16 | ) | 4,135 | 0.29 | 0.29 | 0.29 | 1.54 | – | |||||||||||||||||||||
14.95 | 608,443 | 0.54 | 0.54 | 0.54 | 2.09 | 34 | ||||||||||||||||||||||
14.03 | 135,541 | 1.36 | 1.33 | 1.33 | 1.34 | – | ||||||||||||||||||||||
14.07 | 225,155 | 1.29 | 1.29 | 1.29 | 1.35 | – | ||||||||||||||||||||||
15.35 | 927 | 0.22 | 0.22 | 0.22 | 1.88 | – | ||||||||||||||||||||||
11.29 | (f) | 115 | 0.93 | (g) | 0.93 | (g) | 0.93 | (g) | 0.94 | (g) | – | |||||||||||||||||
11.61 | (f) | 2,679 | 0.66 | (g) | 0.66 | (g) | 0.66 | (g) | 1.23 | (g) | – | |||||||||||||||||
11.79 | (f) | 725 | 0.36 | (g) | 0.36 | (g) | 0.36 | (g) | 1.54 | (g) | – | |||||||||||||||||
11.98 | 453,492 | 0.62 | 0.62 | 0.62 | 1.52 | 15 | ||||||||||||||||||||||
11.22 | 109,117 | 1.44 | 1.36 | 1.36 | 0.82 | – | ||||||||||||||||||||||
11.24 | 171,073 | 1.38 | 1.36 | 1.36 | 0.78 | – | ||||||||||||||||||||||
3.35 | (f) | 353 | 0.39 | (g) | 0.39 | (g) | 0.39 | (g) | 1.47 | (g) | – | |||||||||||||||||
7.47 | 262,878 | 0.66 | 0.60 | 0.60 | 1.26 | 2 | ||||||||||||||||||||||
6.66 | 72,619 | 1.47 | 1.31 | 1.31 | 0.55 | – | ||||||||||||||||||||||
6.66 | 103,248 | 1.41 | 1.31 | 1.31 | 0.56 | – |
17
The Hartford Mutual Funds, Inc.
December 15, 2009
18
(1995-2003).
19
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
20
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.
888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov.
21
U.S. Treasury* | 5.00 | % | ||
Other Direct Federal Obligations* | 1.00 | % | ||
Other Securities | 94.00 | % | ||
Total | 100.00 | % | ||
DRD† | 55.00 | % | ||
QDI‡ | 60.00 | % | ||
QII§ | 65.00 | % |
* | The income received from federal obligations. | |
† | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
‡ | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. | |
§ | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.181 | N/A | N/A | 0.181 | ||||||||||||
Class B | 0.114 | N/A | N/A | 0.114 | ||||||||||||
Class C | 0.117 | N/A | N/A | 0.117 | ||||||||||||
Class I | 0.207 | N/A | N/A | 0.207 | ||||||||||||
Class R3 | 0.149 | N/A | N/A | 0.149 | ||||||||||||
Class R4 | 0.182 | N/A | N/A | 0.182 | ||||||||||||
Class R5 | 0.207 | N/A | N/A | 0.207 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,176.90 | $ | 3.07 | $ | 1,000.00 | $ | 1,022.38 | $ | 2.85 | 0.56 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,171.60 | $ | 7.55 | $ | 1,000.00 | $ | 1,018.25 | $ | 7.02 | 1.38 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,172.10 | $ | 7.17 | $ | 1,000.00 | $ | 1,018.60 | $ | 6.67 | 1.31 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,178.80 | $ | 1.48 | $ | 1,000.00 | $ | 1,023.84 | $ | 1.38 | 0.27 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,173.80 | $ | 5.21 | $ | 1,000.00 | $ | 1,020.42 | $ | 4.84 | 0.95 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,177.00 | $ | 3.18 | $ | 1,000.00 | $ | 1,022.28 | $ | 2.96 | 0.58 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,178.50 | $ | 1.54 | $ | 1,000.00 | $ | 1,023.79 | $ | 1.43 | 0.28 | 184 | 365 |
23
24
25
26
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
17 | ||||
18 | ||||
19 | ||||
20 | ||||
21 | ||||
32 | ||||
34 | ||||
35 | ||||
37 | ||||
37 | ||||
38 | ||||
39 | ||||
40 |
(subadvised by Wellington Management Company, LLP) | Investment objective — Seeks to provide current income with growth of capital as a secondary objective. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
Balanced Income A# | 20.29 | % | 2.16 | % | ||||
Balanced Income A## | 13.67 | % | 0.40 | % | ||||
Balanced Income B# | 19.37 | % | 1.40 | % | ||||
Balanced Income B## | 14.37 | % | 0.55 | % | ||||
Balanced Income C# | 19.44 | % | 1.40 | % | ||||
Balanced Income C## | 18.44 | % | 1.40 | % | ||||
Balanced Income Y# | 20.67 | % | 2.52 | % | ||||
Barclays Capital Corporate Index | 31.07 | % | 6.41 | % | ||||
Russell 1000 Value Index | 4.78 | % | -7.13 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 09/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
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 |
2
3
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Equity Securities | ||||
Banks (Financials) | 4.6 | % | ||
Capital Goods (Industrials) | 5.4 | |||
Commercial & Professional Services (Industrials) | 1.2 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 0.8 | |||
Consumer Services (Consumer Discretionary) | 1.1 | |||
Diversified Financials (Financials) | 0.0 | |||
Energy (Energy) | 6.4 | |||
Food & Staples Retailing (Consumer Staples) | 0.5 | |||
Food, Beverage & Tobacco (Consumer Staples) | 3.4 | |||
Household & Personal Products (Consumer Staples) | 1.2 | |||
Insurance (Financials) | 2.0 | |||
Materials (Materials) | 1.8 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 5.7 | |||
Retailing (Consumer Discretionary) | 2.3 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 2.3 | |||
Software & Services (Information Technology) | 0.0 | |||
Telecommunication Services (Services) | 1.3 | |||
Utilities (Utilities) | 2.7 | |||
Fixed Income Securities | ||||
Accommodation and Food Services (Services) | 0.1 | |||
Administrative Waste Management and Remediation (Services) | 0.0 | |||
Agriculture, Forestry, Fishing and Hunting (Consumer Staples) | 0.1 | |||
Air Transportation (Transportation) | 0.3 | |||
Arts, Entertainment and Recreation (Services) | 0.3 | |||
Arts, Entertainment, and Recreation (Services) | 1.8 | |||
Beverage and Tobacco Product Manufacturing (Consumer Staples) | 1.5 | |||
Chemical Manufacturing (Basic Materials) | 0.7 | |||
Computer and Electronic Product Manufacturing (Technology) | 0.3 | |||
Construction (Consumer Cyclical) | 0.0 | |||
Educational Services (Services) | 0.0 | |||
Fabricated Metal Product Manufacturing (Basic Materials) | 0.3 | |||
Finance and Insurance (Finance) | 20.6 | |||
Food Manufacturing (Consumer Staples) | 0.5 | |||
Foreign Governments (Foreign Governments) | 4.3 | |||
General Obligations (General Obligations) | 0.2 | |||
Health Care and Social Assistance (Health Care) | 2.0 | |||
Information (Technology) | 5.7 | |||
Machinery Manufacturing (Capital Goods) | 0.2 | |||
Mining (Basic Materials) | 0.6 | |||
Miscellaneous Manufacturing (Capital Goods) | 0.5 | |||
Motor Vehicle & Parts Manufacturing (Consumer Cyclical) | 0.5 | |||
Paper Manufacturing (Basic Materials) | 0.3 | |||
Petroleum and Coal Products Manufacturing (Energy) | 3.6 | |||
Pipeline Transportation (Utilities) | 1.5 | |||
Plastics and Rubber Products Manufacturing (Basic Materials) | 0.1 | |||
Primary Metal Manufacturing (Basic Materials) | 0.3 | |||
Printing and Related Support Activities (Services) | 0.1 | |||
Professional, Scientific and Technical Services (Services) | 0.9 | |||
Public Facilities (Public Facilities) | 0.1 | |||
Real Estate and Rental and Leasing (Finance) | 0.5 | |||
Retail Trade (Consumer Cyclical) | 0.8 | |||
Soap, Cleaning Compound, and Toilet Manufacturing (Consumer Staples) | 0.0 | |||
Transportation (Transportation) | 0.3 | |||
Transportation Equipment Manufacturing (Transportation) | 0.0 | |||
Utilities (Utilities) | 3.3 | |||
Water Transportation (Transportation) | 0.1 | |||
Wholesale Trade (Consumer Cyclical) | 0.3 | |||
Short-Term Investments | 3.8 | |||
Other Assets and Liabilities | 0.8 | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
Category | Net Assets | |||
Asset & Commercial Mortgage Backed Securities | 0.8 | % | ||
Common Stocks | 42.6 | |||
Corporate Bonds: Investment Grade | 44.6 | |||
Corporate Bonds: Non-Investment Grade | 6.7 | |||
Municipal Bonds | 0.6 | |||
Preferred Stocks | 0.1 | |||
Short-Term Investments | 3.8 | |||
Other Assets and Liabilities | 0.8 | |||
Total | 100.0 | % | ||
4
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
COMMON STOCKS - 42.6% | ||||||||
Banks - 4.5% | ||||||||
13 | Bank of Nova Scotia | $ | 531 | |||||
68 | HSBC Holding plc | 747 | ||||||
9 | M&T Bank Corp. | 534 | ||||||
22 | Standard Chartered plc | 549 | ||||||
14 | Toronto-Dominion Bank ADR | 801 | ||||||
3,162 | ||||||||
Capital Goods - 5.4% | ||||||||
10 | 3M Co. | 699 | ||||||
8 | Caterpillar, Inc. | 430 | ||||||
9 | Eaton Corp. | 520 | ||||||
12 | Emerson Electric Co. | 442 | ||||||
38 | General Electric Co. | 536 | ||||||
11 | Illinois Tool Works, Inc. | 482 | ||||||
2 | Schneider Electric S.A. | 160 | ||||||
10 | Stanley Works | 434 | ||||||
3,703 | ||||||||
Commercial & Professional Services - 1.2% | ||||||||
12 | Republic Services, Inc. | 316 | ||||||
17 | Waste Management, Inc. | 499 | ||||||
815 | ||||||||
Consumer Durables & Apparel - 0.8% | ||||||||
19 | Mattel, Inc. | 352 | ||||||
3 | V.F. Corp. | 241 | ||||||
593 | ||||||||
Consumer Services - 1.1% | ||||||||
13 | McDonald’s Corp. | 744 | ||||||
Energy - 6.4% | ||||||||
22 | BP plc ADR | 1,217 | ||||||
19 | Chevron Corp. | 1,462 | ||||||
14 | ConocoPhillips Holding Co. | 718 | ||||||
12 | Marathon Oil Corp. | 374 | ||||||
13 | Total S.A. ADR | 757 | ||||||
4,528 | ||||||||
Food & Staples Retailing - 0.5% | ||||||||
13 | Sysco Corp. | 354 | ||||||
Food, Beverage & Tobacco - 3.4% | ||||||||
26 | Altria Group, Inc. | 474 | ||||||
9 | H.J. Heinz Co. | 342 | ||||||
12 | Kraft Foods, Inc. | 341 | ||||||
3 | Lorillard, Inc. | 233 | ||||||
3 | PepsiCo, Inc. | 194 | ||||||
12 | Philip Morris International, Inc. | 559 | ||||||
9 | Unilever N.V. NY Shares ADR | 263 | ||||||
2,406 | ||||||||
Household & Personal Products - 1.2% | ||||||||
14 | Kimberly-Clark Corp. | 881 | ||||||
Insurance - 2.0% | ||||||||
6 | Aflac, Inc. | 228 | ||||||
8 | Allstate Corp. | 240 | ||||||
7 | Chubb Corp. | 315 | ||||||
27 | Marsh & McLennan Cos., Inc. | 636 | ||||||
1,419 | ||||||||
Materials - 1.8% | ||||||||
18 | E.I. DuPont de Nemours & Co. | 560 | ||||||
11 | Packaging Corp. of America | 197 | ||||||
8 | PPG Industries, Inc. | 474 | ||||||
1,231 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 5.7% | ||||||||
6 | Eli Lilly & Co. | 207 | ||||||
7 | GlaxoSmithKline plc ADR | 272 | ||||||
17 | Johnson & Johnson | 998 | ||||||
43 | Merck & Co., Inc. | 1,330 | ||||||
69 | Pfizer, Inc. | 1,175 | ||||||
3,982 | ||||||||
Retailing - 2.3% | ||||||||
18 | Genuine Parts Co. | 623 | ||||||
40 | Home Depot, Inc. | 999 | ||||||
1,622 | ||||||||
Semiconductors & Semiconductor Equipment - 2.3% | ||||||||
17 | Analog Devices, Inc. | 438 | ||||||
29 | Intel Corp. | 550 | ||||||
36 | Maxim Integrated Products, Inc. | 604 | ||||||
1,592 | ||||||||
Software & Services - 0.0% | ||||||||
— | Unisys Corp. • | 3 | ||||||
Telecommunication Services - 1.3% | ||||||||
25 | AT&T, Inc. | 651 | ||||||
10 | Verizon Communications, Inc. | 293 | ||||||
944 | ||||||||
Utilities - 2.7% | ||||||||
10 | American Electric Power Co., Inc. | 296 | ||||||
22 | Companhia Energetica de Minas Gerais ADR | 349 | ||||||
20 | Dominion Resources, Inc. | 668 | ||||||
4 | Edison International | 124 | ||||||
4 | Exelon Corp. | 169 | ||||||
6 | FPL Group, Inc. | 310 | ||||||
1,916 | ||||||||
Total common stocks (cost $28,305) | $ | 29,895 | ||||||
PREFERRED STOCKS - 0.1% | ||||||||
Banks - 0.1% | ||||||||
— | Wells Fargo & Co.۞ | $ | 54 | |||||
Diversified Financials - 0.0% | ||||||||
1 | AMG Capital Trust I۞ | 25 | ||||||
Total preferred stocks (cost $76) | $ | 79 | ||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 0.8% | ||||||||
Finance and Insurance - 0.8% | ||||||||
Banc of America Commercial Mortgage, Inc. | ||||||||
$ | 85 | 5.45%, 01/15/2049 | $ | 79 | ||||
Commercial Mortgage Pass-Through Certificates | ||||||||
100 | 5.96%, 06/10/2046Δ | 99 | ||||||
Long Beach Automotive Receivables Trust | ||||||||
100 | 5.03%, 01/15/2014 | 100 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 0.8% - (continued) | ||||||||
Finance and Insurance - 0.8% - (continued) | ||||||||
Merrill Lynch Mortgage Trust | ||||||||
$ | 100 | 5.05%, 07/12/2038 | $ | 98 | ||||
100 | 5.79%, 05/12/2039 Δ | 102 | ||||||
Morgan Stanley Capital I | ||||||||
100 | 5.23%, 09/15/2042 | 100 | ||||||
578 | ||||||||
Total asset & commercial mortgage backed securities (cost $580) | $ | 578 | ||||||
CORPORATE BONDS: INVESTMENT GRADE - 44.6% | ||||||||
Accommodation and Food Services - 0.0% | ||||||||
Wyndham Worldwide Corp. | ||||||||
$ | 10 | 6.00%, 12/01/2016 | $ | 9 | ||||
Agriculture, Forestry, Fishing and Hunting - 0.1% | ||||||||
Weyerhaeuser Co. | ||||||||
85 | 7.38%, 10/01/2019 - 03/15/2032 | 86 | ||||||
86 | ||||||||
Air Transportation - 0.2% | ||||||||
American Airlines, Inc. | ||||||||
24 | 3.86%, 07/09/2010 | 24 | ||||||
Continental Airlines, Inc. | ||||||||
20 | 5.98%, 04/19/2022 | 19 | ||||||
40 | 6.90%, 04/19/2022 | 35 | ||||||
Southwest Airlines Co. | ||||||||
56 | 6.15%, 08/01/2022 | 56 | ||||||
134 | ||||||||
Arts, Entertainment and Recreation - 0.2% | ||||||||
News America Holdings, Inc. | ||||||||
100 | 8.88%, 04/26/2023 | 118 | ||||||
Arts, Entertainment, and Recreation - 1.5% | ||||||||
AT&T Broadband Corp. | ||||||||
120 | 8.38%, 03/15/2013 | 139 | ||||||
CBS Corp. | ||||||||
105 | 8.20%, 05/15/2014 | 117 | ||||||
25 | 8.88%, 05/15/2019 | 28 | ||||||
DirecTV Holdings LLC | ||||||||
125 | 4.75%, 10/01/2014 ■ | 128 | ||||||
News America, Inc. | ||||||||
146 | 6.40%, 12/15/2035 | 146 | ||||||
Thomson Reuters Corp. | ||||||||
175 | 4.70%, 10/15/2019 | 176 | ||||||
Time Warner Entertainment Co., L.P. | ||||||||
30 | 8.38%, 03/15/2023 | 35 | ||||||
Viacom, Inc. | ||||||||
50 | 4.25%, 09/15/2015 | 50 | ||||||
170 | 4.38%, 09/15/2014 | 175 | ||||||
40 | 6.13%, 10/05/2017 | 43 | ||||||
45 | 6.25%, 04/30/2016 | 49 | ||||||
1,086 | ||||||||
Beverage and Tobacco Product Manufacturing - 1.5% | ||||||||
Altria Group, Inc. | ||||||||
150 | 9.25%, 08/06/2019 | 182 | ||||||
105 | 9.70%, 11/10/2018 | 129 | ||||||
35 | 10.20%, 02/06/2039 | 47 | ||||||
Anheuser-Busch InBev N.V. | ||||||||
100 | 5.38%, 11/15/2014 - 01/15/2020 ■ | 104 | ||||||
70 | 7.20%, 01/15/2014 ■ | 79 | ||||||
75 | 7.75%, 01/15/2019 ■ | 87 | ||||||
BAT International Finance plc | ||||||||
20 | 8.13%, 11/15/2013 ■ | 23 | ||||||
35 | 9.50%, 11/15/2018 ■ | 45 | ||||||
Cia Brasileira de Bebidas | ||||||||
50 | 8.75%, 09/15/2013 | 58 | ||||||
Dr. Pepper Snapple Group | ||||||||
75 | 6.82%, 05/01/2018 | 86 | ||||||
PepsiAmericas, Inc. | ||||||||
35 | 4.88%, 01/15/2015 | 38 | ||||||
Philip Morris International, Inc. | ||||||||
55 | 6.38%, 05/16/2038 | 62 | ||||||
Reynolds American, Inc. | ||||||||
100 | 7.75%, 06/01/2018 | 108 | ||||||
1,048 | ||||||||
Chemical Manufacturing - 0.6% | ||||||||
Cytec Industries, Inc. | ||||||||
50 | 6.00%, 10/01/2015 | 52 | ||||||
Dow Chemical Co. | ||||||||
95 | 5.90%, 02/15/2015 | 98 | ||||||
Methanex Corp. | ||||||||
20 | 8.75%, 08/15/2012 | 21 | ||||||
Potash Corp. of Saskatchewan, Inc. | ||||||||
75 | 4.88%, 03/30/2020 | 75 | ||||||
30 | 5.25%, 05/15/2014 | 33 | ||||||
Yara International ASA | ||||||||
110 | 5.25%, 12/15/2014 ■ | 114 | ||||||
393 | ||||||||
Computer and Electronic Product Manufacturing - 0.2% | ||||||||
Corning, Inc. | ||||||||
15 | 6.63%, 05/15/2019 | 17 | ||||||
Siemens Finance | ||||||||
100 | 6.13%, 08/17/2026 ■ | 109 | ||||||
126 | ||||||||
Construction - 0.0% | ||||||||
Owens Corning, Inc. | ||||||||
15 | 9.00%, 06/15/2019 | 16 | ||||||
Fabricated Metal Product Manufacturing - 0.2% | ||||||||
Commercial Metals Co. | ||||||||
70 | 6.50%, 07/15/2017 | 71 | ||||||
Fortune Brands, Inc. | ||||||||
70 | 6.38%, 06/15/2014 | 75 | ||||||
146 | ||||||||
Finance and Insurance - 19.3% | ||||||||
Ace Capital Trust II | ||||||||
90 | 9.70%, 04/01/2030 | 100 | ||||||
Ace INA Holdings, Inc. | ||||||||
15 | 5.60%, 05/15/2015 | 16 | ||||||
20 | 5.90%, 06/15/2019 | 22 | ||||||
Allied World Assurance | ||||||||
50 | 7.50%, 08/01/2016 | 52 | ||||||
Allstate Corp. | ||||||||
35 | 6.20%, 05/16/2014 | 39 |
6
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - - 44.6% - (continued) | ||||||||
Finance and Insurance - 19.3% - (continued) | ||||||||
American Express Centurion Bank | ||||||||
$ | 300 | 6.00%, 09/13/2017 | $ | 315 | ||||
American Express Co. | ||||||||
100 | 8.13%, 05/20/2019 | 120 | ||||||
American Express Credit Corp. | ||||||||
50 | 5.13%, 08/25/2014 | 53 | ||||||
Ameriprise Financial, Inc. | ||||||||
2 | 5.35%, 11/15/2010 | 2 | ||||||
20 | 5.65%, 11/15/2015 | 21 | ||||||
Avalonbay Communities, Inc. | ||||||||
45 | 5.70%, 03/15/2017 | 46 | ||||||
BAC Capital Trust XI | ||||||||
105 | 6.63%, 05/23/2036 | 90 | ||||||
BAE Systems Holdings, Inc. | ||||||||
40 | 4.95%, 06/01/2014 ■ | 41 | ||||||
25 | 6.38%, 06/01/2019 ■ | 27 | ||||||
Bank of America Corp. | ||||||||
50 | 4.90%, 05/01/2013 | 52 | ||||||
200 | 5.42%, 03/15/2017 | 196 | ||||||
255 | 5.65%, 05/01/2018 | 258 | ||||||
40 | 5.75%, 12/01/2017 | 41 | ||||||
115 | 6.00%, 09/01/2017 | 117 | ||||||
50 | 7.25%, 10/15/2025 | 53 | ||||||
Banque Cent De Tunisie | ||||||||
10 | 7.38%, 04/25/2012 | 11 | ||||||
Barclays Bank plc | ||||||||
35 | 5.20%, 07/10/2014 | 37 | ||||||
215 | 6.05%, 12/04/2017 ■ | 219 | ||||||
Bear Stearns & Co., Inc. | ||||||||
90 | 5.35%, 02/01/2012 | 96 | ||||||
125 | 6.95%, 08/10/2012 | 140 | ||||||
120 | 7.25%, 02/01/2018 | 137 | ||||||
Brandywine Operating Partnership | ||||||||
15 | 5.70%, 05/01/2017 | 13 | ||||||
21 | 5.75%, 04/01/2012 | 21 | ||||||
50 | 7.50%, 05/15/2015 | 50 | ||||||
Capital One Bank | ||||||||
250 | 8.80%, 07/15/2019 | 296 | ||||||
Citigroup, Inc. | ||||||||
275 | 5.50%, 08/27/2012 - 02/15/2017 | 280 | ||||||
85 | 6.00%, 10/31/2033 | 74 | ||||||
255 | 6.13%, 11/21/2017 - 08/25/2036 | 234 | ||||||
175 | 6.88%, 03/05/2038 | 182 | ||||||
80 | 8.30%, 12/21/2057 Δ | 74 | ||||||
100 | 8.50%, 05/22/2019 | 117 | ||||||
Countrywide Financial Corp. | ||||||||
40 | 5.80%, 06/07/2012 | 43 | ||||||
Credit Suisse First Boston USA, Inc. | ||||||||
35 | 6.13%, 11/15/2011 | 38 | ||||||
Credit Suisse New York | ||||||||
100 | 5.00%, 05/15/2013 | 107 | ||||||
465 | 6.00%, 02/15/2018 | 490 | ||||||
Development Bank of Kazakhstan | ||||||||
35 | 7.38%, 11/12/2013 | 36 | ||||||
Discover Financial Services, Inc. | ||||||||
10 | 6.45%, 06/12/2017 | 9 | ||||||
Eaton Vance Corp. | ||||||||
65 | 6.50%, 10/02/2017 | 69 | ||||||
Equity One, Inc. | ||||||||
65 | 6.00%, 09/15/2017 | 58 | ||||||
Everest Reinsurance Holdings, Inc. | ||||||||
70 | 5.40%, 10/15/2014 | 69 | ||||||
50 | 6.60%, 05/15/2037 Δ | 36 | ||||||
20 | 8.75%, 03/15/2010 | 20 | ||||||
Farmers Exchange Capital | ||||||||
100 | 7.05%, 07/15/2028 ■ | 86 | ||||||
Federal Realty Investment Trust | ||||||||
55 | 5.95%, 08/15/2014 | 55 | ||||||
General Electric Capital Corp. | ||||||||
50 | 4.80%, 05/01/2013 | 53 | ||||||
75 | 5.40%, 09/20/2013 | 80 | ||||||
225 | 5.63%, 05/01/2018 | 232 | ||||||
195 | 5.88%, 01/14/2038 | 186 | ||||||
30 | 6.00%, 06/15/2012 | 33 | ||||||
90 | 6.15%, 08/07/2037 | 88 | ||||||
205 | 6.75%, 03/15/2032 | 215 | ||||||
Goldman Sachs Group, Inc. | ||||||||
140 | 5.45%, 11/01/2012 | 151 | ||||||
75 | 5.95%, 01/15/2027 | 73 | ||||||
180 | 6.25%, 09/01/2017 | 193 | ||||||
100 | 6.35%, 02/15/2034 | 95 | ||||||
220 | 6.45%, 05/01/2036 | 223 | ||||||
30 | 6.60%, 01/15/2012 | 33 | ||||||
205 | 7.50%, 02/15/2019 | 240 | ||||||
Guardian Life Insurance Co. | ||||||||
50 | 7.38%, 09/30/2039 ■ | 51 | ||||||
Health Care Properties | ||||||||
20 | 5.65%, 12/15/2013 | 20 | ||||||
80 | 6.00%, 01/30/2017 | 77 | ||||||
HSBC Finance Corp. | ||||||||
100 | 6.38%, 10/15/2011 | 107 | ||||||
95 | 6.75%, 05/15/2011 | 101 | ||||||
HSBC Holdings plc | ||||||||
250 | 6.80%, 06/01/2038 | 287 | ||||||
Iberdrola Finance Ireland | ||||||||
95 | 5.00%, 09/11/2019 ■ | 96 | ||||||
International Lease Finance Corp. | ||||||||
100 | 5.63%, 09/15/2010 | 95 | ||||||
JP Morgan Chase & Co. | ||||||||
50 | 4.65%, 06/01/2014 | 53 | ||||||
165 | 5.13%, 09/15/2014 | 175 | ||||||
170 | 5.38%, 10/01/2012 | 186 | ||||||
20 | 5.88%, 03/15/2035 | 18 | ||||||
175 | 6.30%, 04/23/2019 | 192 | ||||||
JP Morgan Chase XVII | ||||||||
50 | 5.85%, 08/01/2035 | 44 | ||||||
Keycorp | ||||||||
25 | 6.50%, 05/14/2013 | 26 | ||||||
Kimco Realty Corp. | ||||||||
20 | 5.58%, 11/23/2015 | 20 | ||||||
50 | 5.70%, 05/01/2017 | 48 | ||||||
30 | 5.78%, 03/15/2016 | 30 | ||||||
Lazard Group | ||||||||
80 | 6.85%, 06/15/2017 | 81 | ||||||
Liberty Mutual Group, Inc. | ||||||||
60 | 5.75%, 03/15/2014 ■ | 57 | ||||||
80 | 7.50%, 08/15/2036 ■ | 70 | ||||||
Liberty Property L.P. | ||||||||
50 | 5.50%, 12/15/2016 | 46 | ||||||
50 | 8.50%, 08/01/2010 | 52 |
7
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - - 44.6% - (continued) | ||||||||
Finance and Insurance - 19.3% - (continued) | ||||||||
Lincoln National Corp. | ||||||||
$ | 80 | 5.65%, 08/27/2012 | $ | 83 | ||||
35 | 6.15%, 04/07/2036 | 32 | ||||||
Massachusetts Mutual Life Insurance Co. | ||||||||
125 | 8.88%, 06/01/2039 ■ | 152 | ||||||
Merrill Lynch & Co., Inc. | ||||||||
50 | 5.45%, 02/05/2013 | 52 | ||||||
210 | 6.05%, 08/15/2012 - 05/16/2016 | 218 | ||||||
100 | 6.22%, 09/15/2026 | 96 | ||||||
20 | 6.40%, 08/28/2017 | 21 | ||||||
Metlife, Inc. | ||||||||
25 | 6.13%, 12/01/2011 | 27 | ||||||
40 | 6.75%, 06/01/2016 | 45 | ||||||
Mizuho Financial Group, Inc. | ||||||||
100 | 5.79%, 04/15/2014 ■ | 106 | ||||||
Morgan Stanley | ||||||||
90 | 4.75%, 04/01/2014 | 90 | ||||||
300 | 5.45%, 01/09/2017 | 302 | ||||||
225 | 5.63%, 09/23/2019 | 226 | ||||||
200 | 6.00%, 04/28/2015 | 214 | ||||||
National City Corp. | ||||||||
40 | 4.90%, 01/15/2015 | 41 | ||||||
Nationwide Mutual Insurance Co. | ||||||||
75 | 9.38%, 08/15/2039 ■ | 78 | ||||||
NB Capital Trust IV | �� | |||||||
30 | 8.25%, 04/15/2027 | 29 | ||||||
Pacific Life Insurance Co. | ||||||||
100 | 9.25%, 06/15/2039 ■ | 111 | ||||||
PNC Funding Corp. | ||||||||
60 | 5.50%, 09/28/2012 | 64 | ||||||
85 | 6.70%, 06/10/2019 | 95 | ||||||
Pricoa Global Funding I | ||||||||
100 | 5.45%, 06/11/2014 ■ | 105 | ||||||
Principal Financial Group, Inc. | ||||||||
65 | 7.88%, 05/15/2014 | 73 | ||||||
40 | 8.88%, 05/15/2019 | 46 | ||||||
Prologis | ||||||||
75 | 7.38%, 10/30/2019 | 75 | ||||||
Prudential Financial, Inc. | ||||||||
50 | 4.75%, 09/17/2015 | 50 | ||||||
70 | 6.10%, 06/15/2017 | 72 | ||||||
15 | 6.20%, 01/15/2015 | 16 | ||||||
Realty Income Corp. | ||||||||
85 | 6.75%, 08/15/2019 | 85 | ||||||
Reinsurance Group of America, Inc. | ||||||||
60 | 5.63%, 03/15/2017 | 59 | ||||||
Royal Bank of Scotland plc | ||||||||
100 | 4.88%, 08/25/2014 ■ | 102 | ||||||
Schwab Capital Trust I | ||||||||
35 | 7.50%, 11/15/2037 Δ | 32 | ||||||
Simon Property Group L.P. | ||||||||
45 | 5.38%, 06/01/2011 | 47 | ||||||
80 | 5.63%, 08/15/2014 | 84 | ||||||
80 | 6.75%, 05/15/2014 | 86 | ||||||
SLM Corp. | ||||||||
50 | 5.00%, 04/15/2015 | 39 | ||||||
30 | 5.05%, 11/14/2014 | 24 | ||||||
State Street Capital Trust IV | ||||||||
100 | 1.30%, 06/15/2037 Δ | 67 | ||||||
State Street Corp. | ||||||||
25 | 7.65%, 06/15/2010 | 26 | ||||||
Symetra Financial Corp. | ||||||||
10 | 6.13%, 04/01/2016 ■ | 9 | ||||||
Textron, Inc. | ||||||||
25 | 5.40%, 04/28/2013 | 25 | ||||||
Trustreet Properties, Inc. | ||||||||
80 | 7.50%, 04/01/2015 | 85 | ||||||
UFJ Finance Aruba AEC | ||||||||
100 | 6.75%, 07/15/2013 | 111 | ||||||
United Dominion Realty Trust, Inc. | ||||||||
55 | 6.05%, 06/01/2013 | 56 | ||||||
UnitedHealth Group, Inc. | ||||||||
100 | 5.50%, 11/15/2012 | 106 | ||||||
50 | 5.80%, 03/15/2036 | 47 | ||||||
Unitrin, Inc. | ||||||||
100 | 4.88%, 11/01/2010 | 99 | ||||||
Unum Group | ||||||||
60 | 7.13%, 09/30/2016 | 62 | ||||||
Ventas Realty L.P. | ||||||||
10 | 6.50%, 06/01/2016 | 10 | ||||||
W.R. Berkley Corp. | ||||||||
90 | 5.13%, 09/30/2010 | 91 | ||||||
Wachovia Bank NA | ||||||||
275 | 6.60%, 01/15/2038 | 300 | ||||||
Wachovia Corp. | ||||||||
55 | 4.88%, 02/15/2014 | 56 | ||||||
100 | 5.50%, 05/01/2013 | 107 | ||||||
120 | 5.63%, 10/15/2016 | 123 | ||||||
105 | 5.75%, 02/01/2018 | 110 | ||||||
WEA Finance LLC | ||||||||
100 | 7.13%, 04/15/2018 ■ | 103 | ||||||
Wellpoint, Inc. | ||||||||
50 | 6.00%, 02/15/2014 | 54 | ||||||
60 | 7.00%, 02/15/2019 | 68 | ||||||
Wells Fargo & Co. | ||||||||
50 | 4.38%, 01/31/2013 | 52 | ||||||
50 | 5.63%, 12/11/2017 | 52 | ||||||
WR Berkley Corp. | ||||||||
25 | 5.88%, 02/15/2013 | 25 | ||||||
13,506 | ||||||||
Food Manufacturing - 0.5% | ||||||||
Cargill, Inc. | ||||||||
95 | 5.60%, 09/15/2012 ■ | 102 | ||||||
Kraft Foods, Inc. | ||||||||
100 | 6.50%, 08/11/2017 | 108 | ||||||
130 | 6.75%, 02/19/2014 | 145 | ||||||
355 | ||||||||
Foreign Governments - 2.5% | ||||||||
Brazil (Republic of) | ||||||||
155 | 6.00%, 08/15/2010 - 01/17/2017 җ | 139 | ||||||
40 | 7.13%, 01/20/2037 | 46 | ||||||
135 | 7.88%, 03/07/2015 | 157 | ||||||
65 | 8.88%, 10/14/2019 - 04/15/2024 | 84 | ||||||
BRL | 50 | 10.00%, 01/01/2012 | 28 | |||||
40 | 10.50%, 07/14/2014 | 51 | ||||||
20 | 11.00%, 08/17/2040 | 27 |
8
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - - 44.6% - (continued) | ||||||||
Foreign Governments - 2.5% - (continued) | ||||||||
Colombia (Republic of) | ||||||||
$ | 95 | 8.13%, 05/21/2024 | $ | 113 | ||||
65 | 11.75%, 02/25/2020 | 94 | ||||||
El Salvador (Republic of) | ||||||||
25 | 7.75%, 01/24/2023 § | 26 | ||||||
Hungary (Republic of) | ||||||||
HUF | 1,800 | 6.00%, 11/24/2023 | 9 | |||||
Mexican Bonos De Desarrollo | ||||||||
MXP | 355 | 7.25%, 12/15/2016 | 26 | |||||
Peru (Republic of) | ||||||||
10 | 7.13%, 03/30/2019 | 11 | ||||||
10 | 8.38%, 05/03/2016 | 12 | ||||||
30 | 8.75%, 11/21/2033 | 39 | ||||||
5 | 9.88%, 02/06/2015 | 6 | ||||||
Russian Federation Government | ||||||||
414 | 7.50%, 03/31/2030 § | 460 | ||||||
15 | 12.75%, 06/24/2028 § | 26 | ||||||
South Africa (Republic of) | ||||||||
35 | 6.50%, 06/02/2014 | 38 | ||||||
20 | 7.38%, 04/25/2012 | 22 | ||||||
United Mexican States | ||||||||
122 | 5.63%, 01/15/2017 | 127 | ||||||
100 | 5.88%, 02/17/2014 | 107 | ||||||
56 | 6.05%, 01/11/2040 | 56 | ||||||
10 | 6.63%, 03/03/2015 | 11 | ||||||
MXP | 175 | 7.75%, 12/14/2017 | 13 | |||||
MXP | 175 | 8.00%, 12/19/2013 | 13 | |||||
ITL | 5,000 | 11.00%, 05/08/2017 | 5 | |||||
25 | 11.38%, 09/15/2016 | 34 | ||||||
1,780 | ||||||||
Health Care and Social Assistance - 1.7% | ||||||||
Amerisource Bergen Corp. | ||||||||
25 | 5.63%, 09/15/2012 | 27 | ||||||
101 | 5.88%, 09/15/2015 | 109 | ||||||
Amgen, Inc. | ||||||||
20 | 5.70%, 02/01/2019 | 22 | ||||||
25 | 6.40%, 02/01/2039 | 28 | ||||||
AstraZeneca plc | ||||||||
45 | 6.45%, 09/15/2037 | 52 | ||||||
CVS Caremark Corp. | ||||||||
150 | 6.25%, 06/01/2027 | 155 | ||||||
50 | 6.60%, 03/15/2019 | 56 | ||||||
39 | 6.94%, 01/10/2030 | 40 | ||||||
CVS Lease Pass-Through Trust | ||||||||
19 | 6.04%, 12/10/2028 | 18 | ||||||
Express Scripts, Inc. | ||||||||
100 | 6.25%, 06/15/2014 | 110 | ||||||
Glaxosmithkline Capital, Inc. | ||||||||
50 | 5.65%, 05/15/2018 | 55 | ||||||
Laboratory Corp. | ||||||||
20 | 5.63%, 12/15/2015 | 21 | ||||||
Medco Health Solutions, Inc. | ||||||||
75 | 7.13%, 03/15/2018 | 85 | ||||||
Pfizer, Inc. | ||||||||
105 | 6.20%, 03/15/2019 | 120 | ||||||
50 | 7.20%, 03/15/2039 | 63 | ||||||
Quest Diagnostics, Inc. | ||||||||
115 | 6.95%, 07/01/2037 | 131 | ||||||
Roche Holdings, Inc. | ||||||||
75 | 6.00%, 03/01/2019 ■ | 84 | ||||||
1,176 | ||||||||
Information - 4.9% | ||||||||
AT&T, Inc. | ||||||||
30 | 5.10%, 09/15/2014 | 32 | ||||||
90 | 6.15%, 09/15/2034 | 91 | ||||||
350 | 6.30%, 01/15/2038 | 365 | ||||||
110 | 6.50%, 09/01/2037 | 117 | ||||||
BellSouth Corp. | ||||||||
30 | 5.20%, 09/15/2014 | 32 | ||||||
British Telecommunications plc | ||||||||
35 | 9.12%, 12/15/2010 Δ | 38 | ||||||
60 | 9.50%, 12/15/2030 Δ | 75 | ||||||
Cingular Wireless Services, Inc. | ||||||||
120 | 8.75%, 03/01/2031 | 158 | ||||||
Comcast Cable Communications, Inc. | ||||||||
20 | 6.75%, 01/30/2011 | 21 | ||||||
Comcast Corp. | ||||||||
100 | 5.70%, 05/15/2018 | 105 | ||||||
50 | 6.40%, 05/15/2038 | 51 | ||||||
80 | 6.45%, 03/15/2037 | 82 | ||||||
110 | 7.05%, 03/15/2033 | 119 | ||||||
Deutsche Telekom International Finance B.V. | ||||||||
125 | 4.88%, 07/08/2014 | 132 | ||||||
120 | 8.75%, 06/15/2030 | 155 | ||||||
Qwest Corp. | ||||||||
25 | 7.63%, 06/15/2015 | 25 | ||||||
Rogers Communications, Inc. | ||||||||
100 | 6.80%, 08/15/2018 | 113 | ||||||
Telecom Italia Capital | ||||||||
10 | 5.25%, 10/01/2015 | 10 | ||||||
180 | 6.20%, 07/18/2011 | 192 | ||||||
175 | 7.72%, 06/04/2038 | 203 | ||||||
Telefonica Europe B.V. | ||||||||
65 | 8.25%, 09/15/2030 | 83 | ||||||
Time Warner Cable, Inc. | ||||||||
120 | 5.40%, 07/02/2012 | 128 | ||||||
85 | 6.55%, 05/01/2037 | 88 | ||||||
25 | 6.75%, 06/15/2039 | 27 | ||||||
50 | 7.30%, 07/01/2038 | 56 | ||||||
50 | 8.25%, 04/01/2019 | 60 | ||||||
Verizon Communications, Inc. | ||||||||
70 | 6.40%, 02/15/2038 | 75 | ||||||
30 | 8.75%, 11/01/2018 | 37 | ||||||
Verizon Global Funding Corp. | ||||||||
25 | 6.88%, 06/15/2012 | 28 | ||||||
310 | 7.75%, 12/01/2030 | 371 | ||||||
Verizon Wireless | ||||||||
50 | 5.55%, 02/01/2014 ■ | 55 | ||||||
225 | 8.50%, 11/15/2018 ■ | 280 | ||||||
Vodafone Group plc | ||||||||
15 | 6.15%, 02/27/2037 | 16 | ||||||
3,420 | ||||||||
Machinery Manufacturing - 0.2% | ||||||||
Xerox Corp. | ||||||||
100 | 5.50%, 05/15/2012 | 105 | ||||||
60 | 6.40%, 03/15/2016 | 64 | ||||||
169 | ||||||||
9
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - - 44.6% - (continued) | ||||||||
Mining - 0.5% | ||||||||
Falconbridge Ltd. | ||||||||
$ | 75 | 6.00%, 10/15/2015 | $ | 75 | ||||
Inco Ltd. | ||||||||
30 | 7.20%, 09/15/2032 | 31 | ||||||
45 | 7.75%, 05/15/2012 | 49 | ||||||
Rio Tinto Finance USA Ltd. | ||||||||
150 | 5.88%, 07/15/2013 | 162 | ||||||
55 | 9.00%, 05/01/2019 | 69 | ||||||
386 | ||||||||
Miscellaneous Manufacturing - 0.5% | ||||||||
Goodrich Corp. | ||||||||
35 | 6.29%, 07/01/2016 | 38 | ||||||
Hutchison Whampoa International Ltd. | ||||||||
100 | 5.75%, 09/11/2019 ■ | 101 | ||||||
L-3 Communications Corp. | ||||||||
50 | 5.20%, 10/15/2019 ■ | 50 | ||||||
Textron, Inc. | ||||||||
100 | 6.20%, 03/15/2015 | 102 | ||||||
Tyco International Group S.A. | ||||||||
25 | 6.75%, 02/15/2011 | 27 | ||||||
318 | ||||||||
Motor Vehicle & Parts Manufacturing - 0.3% | ||||||||
DaimlerChrysler NA Holdings Corp. | ||||||||
70 | 6.50%, 11/15/2013 | 76 | ||||||
100 | 8.50%, 01/18/2031 | 122 | ||||||
198 | ||||||||
Paper Manufacturing - 0.2% | ||||||||
Bemis Co., Inc. | ||||||||
25 | 5.65%, 08/01/2014 | 27 | ||||||
International Paper Co. | ||||||||
50 | 9.38%, 05/15/2019 | 61 | ||||||
Temple-Inland, Inc. | ||||||||
40 | 6.63%, 01/15/2016 | 40 | ||||||
128 | ||||||||
Petroleum and Coal Products Manufacturing - 3.2% | ||||||||
AGL Capital Corp. | ||||||||
35 | 6.38%, 07/15/2016 | 38 | ||||||
Amerada Hess Corp. | ||||||||
45 | 7.88%, 10/01/2029 | 53 | ||||||
Anadarko Petroleum Corp. | ||||||||
70 | 5.75%, 06/15/2014 | 75 | ||||||
Atmos Energy Corp. | ||||||||
40 | 6.35%, 06/15/2017 | 43 | ||||||
Canadian Natural Resources Ltd. | ||||||||
30 | 5.70%, 05/15/2017 | 32 | ||||||
Devon Financing Corp. | ||||||||
75 | 7.88%, 09/30/2031 | 93 | ||||||
Ecopetrol S.A. | ||||||||
10 | 7.63%, 07/23/2019 | 11 | ||||||
EnCana Corp. | ||||||||
40 | 6.50%, 05/15/2019 | 45 | ||||||
Gaz Capital S.A. | ||||||||
70 | 8.63%, 04/28/2034 § | 77 | ||||||
Hess Corp. | ||||||||
85 | 7.00%, 02/15/2014 | 96 | ||||||
Kazmunaigaz Finance Sub B.V. | ||||||||
100 | 11.75%, 01/23/2015 § | 119 | ||||||
Nexen, Inc. | ||||||||
155 | 6.20%, 07/30/2019 | 162 | ||||||
Panhandle Eastern Pipeline | ||||||||
75 | 6.20%, 11/01/2017 | 79 | ||||||
Petrobras International Finance Co. | ||||||||
25 | 6.88%, 01/20/2040 | 25 | ||||||
100 | 7.88%, 03/15/2019 | 113 | ||||||
Petroleos Mexicanos | ||||||||
10 | 4.88%, 03/15/2015 ■ | 10 | ||||||
Petronas Capital Ltd. | ||||||||
15 | 5.25%, 08/12/2019 ■ | 15 | ||||||
Sempra Energy | ||||||||
25 | 6.50%, 06/01/2016 | 27 | ||||||
70 | 8.90%, 11/15/2013 | 83 | ||||||
Talisman Energy, Inc. | ||||||||
15 | 7.75%, 06/01/2019 | 18 | ||||||
Transocean, Inc. | ||||||||
110 | 6.00%, 03/15/2018 | 119 | ||||||
TXU Electric Delivery Co. | ||||||||
200 | 6.38%, 05/01/2012 | 217 | ||||||
Weatherford International Ltd. | ||||||||
175 | 6.00%, 03/15/2018 | 179 | ||||||
Williams Companies, Inc. | ||||||||
45 | 8.75%, 03/15/2032 | 52 | ||||||
Williams Cos., Inc. | ||||||||
150 | 8.13%, 03/15/2012 | 163 | ||||||
XTO Energy, Inc. | ||||||||
80 | 5.50%, 06/15/2018 | 84 | ||||||
150 | 5.75%, 12/15/2013 | 163 | ||||||
25 | 6.75%, 08/01/2037 | 28 | ||||||
45 | 7.50%, 04/15/2012 | 50 | ||||||
2,269 | ||||||||
Pipeline Transportation - 1.4% | ||||||||
DCP Midstream LLC | ||||||||
100 | 6.75%, 09/15/2037 ■ | 94 | ||||||
El Paso Natural Gas Co. | ||||||||
70 | 5.95%, 04/15/2017 | 72 | ||||||
Enterprise Products Operating L.P. | ||||||||
30 | 5.25%, 01/31/2020 | 30 | ||||||
90 | 5.65%, 04/01/2013 | 96 | ||||||
Enterprise Products Operations LLC | ||||||||
100 | 6.50%, 01/31/2019 | 111 | ||||||
Kinder Morgan Energy Partners L.P. | ||||||||
90 | 6.95%, 01/15/2038 | 96 | ||||||
50 | 7.30%, 08/15/2033 | 54 | ||||||
100 | 9.00%, 02/01/2019 | 122 | ||||||
NGPL Pipeco LLC | ||||||||
130 | 6.51%, 12/15/2012 ■ | 142 | ||||||
Plains All American Pipeline L.P. | ||||||||
125 | 5.75%, 01/15/2020 | 129 | ||||||
TransCanada Pipelines Ltd. | ||||||||
45 | 7.63%, 01/15/2039 | 57 | ||||||
1,003 | ||||||||
Primary Metal Manufacturing - 0.3% | ||||||||
Alcan, Inc. | ||||||||
50 | 6.13%, 12/15/2033 | 51 | ||||||
ArcelorMittal | ||||||||
100 | 6.13%, 06/01/2018 | 99 | ||||||
25 | 9.85%, 06/01/2019 | 29 | ||||||
179 | ||||||||
10
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - - 44.6% - (continued) | ||||||||
Professional, Scientific and Technical Services - 0.6% | ||||||||
Electronic Data Systems Corp. | ||||||||
$ | 40 | 7.45%, 10/15/2029 | $ | 49 | ||||
Time Warner, Inc. | ||||||||
50 | 5.50%, 11/15/2011 | 53 | ||||||
85 | 6.75%, 04/15/2011 | 91 | ||||||
210 | 7.63%, 04/15/2031 | 235 | ||||||
428 | ||||||||
Real Estate and Rental and Leasing - 0.5% | ||||||||
COX Communications, Inc. | ||||||||
70 | 6.45%, 12/01/2036 ■ | 70 | ||||||
90 | 7.13%, 10/01/2012 | 101 | ||||||
Duke Realty L.P. | ||||||||
40 | 7.38%, 02/15/2015 | 42 | ||||||
ERAC USA Finance Co. | ||||||||
125 | 7.00%, 10/15/2037 ■ | 121 | ||||||
Regency Centers L.P. | ||||||||
30 | 5.25%, 08/01/2015 | 29 | ||||||
15 | 5.88%, 06/15/2017 | 14 | ||||||
Westfield Group ADR | ||||||||
10 | 5.40%, 10/01/2012 ■ | 10 | ||||||
387 | ||||||||
Retail Trade - 0.4% | ||||||||
Energy Transfer Partners | ||||||||
125 | 6.63%, 10/15/2036 | 131 | ||||||
130 | 8.50%, 04/15/2014 | 151 | ||||||
282 | ||||||||
Utilities - 2.9% | ||||||||
Carolina Power & Light Co. | ||||||||
15 | 5.30%, 01/15/2019 | 16 | ||||||
CenterPoint Energy Houston Electric LLC | ||||||||
35 | 7.00%, 03/01/2014 | 40 | ||||||
CenterPoint Energy Resources Corp. | ||||||||
25 | 7.75%, 02/15/2011 | 27 | ||||||
CenterPoint Energy, Inc. | ||||||||
30 | 6.50%, 05/01/2018 | 30 | ||||||
Commonwealth Edison Co. | ||||||||
100 | 5.80%, 03/15/2018 | 108 | ||||||
Dominion Resources, Inc. | ||||||||
35 | 5.20%, 08/15/2019 | 36 | ||||||
181 | 6.25%, 06/30/2012 | 198 | ||||||
EDP Finance B.V. | ||||||||
100 | 6.00%, 02/02/2018 ■ | 108 | ||||||
Enel Finance International S.A. | ||||||||
100 | 3.88%, 10/07/2014 ■ | 101 | ||||||
125 | 5.13%, 10/07/2019 ■ | 127 | ||||||
Entergy Texas, Inc. | ||||||||
50 | 7.13%, 02/01/2019 | 56 | ||||||
Exelon Generation Co. LLC | ||||||||
20 | 5.20%, 10/01/2019 | 20 | ||||||
FPL Group Capital, Inc. | ||||||||
50 | 6.00%, 03/01/2019 | 55 | ||||||
ITC Midwest LLC | ||||||||
40 | 6.15%, 01/31/2038 ■ | 41 | ||||||
Kansas City Power & Light Co. | ||||||||
50 | 7.15%, 04/01/2019 | 59 | ||||||
MidAmerican Energy Holdings Co. | ||||||||
85 | 5.00%, 02/15/2014 | 90 | ||||||
100 | 5.75%, 04/01/2018 | 107 | ||||||
Nevada Power Co. | ||||||||
100 | 6.50%, 08/01/2018 | 110 | ||||||
NiSource Finance Corp. | ||||||||
10 | 5.25%, 09/15/2017 | 10 | ||||||
140 | 6.40%, 03/15/2018 | 144 | ||||||
Peco Energy Co. | ||||||||
20 | 5.70%, 03/15/2037 | 21 | ||||||
Progress Energy, Inc. | ||||||||
140 | 6.85%, 04/15/2012 | 152 | ||||||
Sierra Pacific Power Co. | ||||||||
100 | 6.00%, 05/15/2016 | 107 | ||||||
Taqa Abu Dhabi National | ||||||||
100 | 6.50%, 10/27/2036 ■ | 98 | ||||||
Union Electric Co. | ||||||||
45 | 6.40%, 06/15/2017 | 49 | ||||||
80 | 6.70%, 02/01/2019 | 90 | ||||||
2,000 | ||||||||
Wholesale Trade - 0.2% | ||||||||
Avnet, Inc. | ||||||||
50 | 6.63%, 09/15/2016 | 53 | ||||||
SABMiller plc | ||||||||
80 | 6.20%, 07/01/2011 ■ | 85 | ||||||
138 | ||||||||
Total corporate bonds: investment grade (cost $29,559) | $ | 31,284 | ||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 6.7% | ||||||||
Accommodation and Food Services - 0.1% | ||||||||
Harrah’s Operating Co., Inc. | ||||||||
$ | 15 | 11.25%, 06/01/2017 ■ | $ | 15 | ||||
MGM Mirage, Inc. | ||||||||
20 | 11.13%, 11/15/2017 ■ | 22 | ||||||
37 | ||||||||
Administrative Waste Management and Remediation - 0.0% | ||||||||
West Corp. | ||||||||
25 | 9.50%, 10/15/2014 | 25 | ||||||
Air Transportation - 0.1% | ||||||||
Continental Airlines, Inc. | ||||||||
21 | 9.80%, 04/01/2021 | 17 | ||||||
Delta Air Lines | ||||||||
25 | 7.92%, 11/18/2010 | 25 | ||||||
42 | ||||||||
Arts, Entertainment and Recreation - 0.1% | ||||||||
First Data Corp. | ||||||||
41 | 10.55%, 09/24/2015 | 37 | ||||||
Marquee Holdings, Inc. | ||||||||
20 | 9.51%, 08/15/2014 | 16 | ||||||
53 | ||||||||
Arts, Entertainment, and Recreation - 0.3% | ||||||||
AMC Entertainment, Inc. | ||||||||
35 | 8.00%, 03/01/2014 | 34 | ||||||
Bonten Media Acquisition | ||||||||
16 | 9.00%, 06/01/2015 ■ | 6 | ||||||
First Data Corp. | ||||||||
25 | 9.88%, 09/24/2015 | 23 | ||||||
Liberty Media Corp. | ||||||||
40 | 8.50%, 07/15/2029 | 36 | ||||||
Peninsula Gaming LLC | ||||||||
10 | 8.38%, 08/15/2015 ■ | 10 | ||||||
5 | 10.75%, 08/15/2017 ■ | 5 |
11
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 6.7% - (continued) | ||||||||
Arts, Entertainment, and Recreation - 0.3% - (continued) | ||||||||
River Rock Entertainment | ||||||||
$ | 10 | 9.75%, 11/01/2011 | $ | 9 | ||||
Seneca Gaming Corp. | ||||||||
50 | 7.25%, 05/01/2012 | 48 | ||||||
Sinclair Broadcast Group, Inc. | ||||||||
6 | 4.88%, 07/15/2018۞ | 6 | ||||||
Sinclair Television Group | ||||||||
15 | 9.25%, 11/01/2017 ■ | 15 | ||||||
Virgin River Casino Corp. | ||||||||
10 | 9.00%, 01/15/2012 | 2 | ||||||
Yonkers Racing Corp. | ||||||||
15 | 11.38%, 07/15/2016 ■ | 16 | ||||||
210 | ||||||||
Chemical Manufacturing - 0.1% | ||||||||
Ashland, Inc. | ||||||||
15 | 9.13%, 06/01/2017 ■ | 16 | ||||||
Hexion Specialty Chemicals | ||||||||
25 | 9.75%, 11/15/2014 | 21 | ||||||
Koppers Holdings, Inc. | ||||||||
30 | 10.92%, 11/15/2014 | 30 | ||||||
Momentive Performance | ||||||||
25 | 9.75%, 12/01/2014 | 21 | ||||||
Terra Capital, Inc. | ||||||||
5 | 7.75%, 11/01/2019 ■ | 5 | ||||||
93 | ||||||||
Computer and Electronic Product Manufacturing - 0.1% | ||||||||
Freescale Semiconductor, Inc. | ||||||||
35 | 9.13%, 12/15/2014 | 26 | ||||||
Hologic, Inc. | ||||||||
25 | 2.00%, 12/15/2037۞ | 20 | ||||||
Jabil Circuit, Inc. | ||||||||
20 | 8.25%, 03/15/2018 | 22 | ||||||
Maxtor Corp. | ||||||||
10 | 2.38%, 08/15/2012۞ | 10 | ||||||
Seagate Technology International | ||||||||
15 | 10.00%, 05/01/2014 ■ | 17 | ||||||
95 | ||||||||
Construction - 0.0% | ||||||||
K. Hovnanian Enterprises | ||||||||
20 | 10.63%, 10/15/2016 ■ | 20 | ||||||
Educational Services - 0.0% | ||||||||
Education Management LLC | ||||||||
1 | 10.25%, 06/01/2016 | 1 | ||||||
Fabricated Metal Product Manufacturing - 0.1% | ||||||||
Blount, Inc. | ||||||||
35 | 8.88%, 08/01/2012 | 36 | ||||||
BWAY Corp. | ||||||||
20 | 10.00%, 04/15/2014 ■ | 21 | ||||||
Hawk Corp. | ||||||||
15 | 8.75%, 11/01/2014 | 15 | ||||||
72 | ||||||||
Finance and Insurance - 0.5% | ||||||||
Arch Western Finance LLC | ||||||||
15 | 6.75%, 07/01/2013 | 15 | ||||||
BAC Capital Trust XIV | ||||||||
20 | 5.63%, 03/15/2012 ♠Δ | 14 | ||||||
CIT Group Funding Co. of Canada | ||||||||
15 | 4.65%, 07/01/2010 | 14 | ||||||
CIT Group, Inc. | ||||||||
105 | 5.65%, 02/13/2017 | 70 | ||||||
25 | 5.85%, 09/15/2016 | 16 | ||||||
CPM Holdings, Inc. | ||||||||
30 | 10.63%, 09/01/2014 ■ | 31 | ||||||
Dollar Financial Corp. | ||||||||
20 | 2.88%, 06/30/2027۞ | 16 | ||||||
Ford Motor Credit Co. | ||||||||
45 | 7.00%, 10/01/2013 | 43 | ||||||
General Motors Acceptance Corp. | ||||||||
40 | 8.00%, 11/01/2031 | 34 | ||||||
GMAC LLC | ||||||||
30 | 6.00%, 12/15/2011 | 28 | ||||||
15 | 6.00%, 12/15/2011 ■ | 14 | ||||||
HBOS plc | ||||||||
50 | 6.00%, 11/01/2033 ■ | 35 | ||||||
Host Marriott L.P. | ||||||||
30 | 6.75%, 06/01/2016 | 29 | ||||||
359 | ||||||||
Food Manufacturing - 0.0% | ||||||||
Land O’Lakes Capital Trust | ||||||||
15 | 7.45%, 03/15/2028 ■ | 13 | ||||||
Foreign Governments - 1.8% | ||||||||
Argentina (Republic of) | ||||||||
EUR | 55 | 2.26%, 12/31/2038 | 24 | |||||
EUR | 12 | 7.82%, 12/31/2033 | 11 | |||||
94 | 8.28%, 12/31/2033 | 66 | ||||||
Colombia (Republic of) | ||||||||
COP | 35,000 | 9.85%, 06/28/2027 | 20 | |||||
COP | 86,000 | 12.00%, 10/22/2015 | 52 | |||||
Costa Rica (Republic of) | ||||||||
5 | 10.00%, 08/01/2020 § | 6 | ||||||
Indonesia (Republic of) | ||||||||
45 | 6.75%, 03/10/2014 ■ | 48 | ||||||
50 | 6.75%, 03/10/2014 § | 53 | ||||||
50 | 7.25%, 04/20/2015 § | 53 | ||||||
Islamic Republic of Pakistan | ||||||||
100 | 7.88%, 03/31/2036 § | 78 | ||||||
Panama (Republic of) | ||||||||
40 | 7.25%, 03/15/2015 | 44 | ||||||
Philippines (Republic of) | ||||||||
30 | 9.38%, 01/18/2017 | 37 | ||||||
30 | 9.88%, 01/15/2019 | 39 | ||||||
Turkey (Republic of) | ||||||||
70 | 6.88%, 03/17/2036 | 71 | ||||||
105 | 7.25%, 03/15/2015 | 117 | ||||||
70 | 9.50%, 01/15/2014 | 84 | ||||||
TRY | 6 | 10.00%, 02/15/2012 җ | 5 | |||||
50 | 11.00%, 01/14/2013 | 61 | ||||||
TRY | 58 | 12.00%, 08/14/2013 җ | 49 | |||||
Ukraine Government | ||||||||
EUR | 50 | 4.95%, 10/13/2015 § | 51 | |||||
Uruguay (Republic of) | ||||||||
UYU | 526 | 5.00%, 09/14/2018 җ | 26 | |||||
10 | 6.88%, 09/28/2025 | 10 |
12
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 6.7% - (continued) | ||||||||
Foreign Governments - 1.8% - (continued) | ||||||||
Venezuela (Republic of) | ||||||||
$ | 85 | 6.00%, 12/09/2020 § | $ | 49 | ||||
35 | 7.00%, 03/31/2038 § | 19 | ||||||
110 | 7.65%, 04/21/2025 | 67 | ||||||
75 | 9.00%, 05/07/2023 § | 53 | ||||||
35 | 9.25%, 05/07/2028 § | 25 | ||||||
30 | 9.38%, 01/13/2034 | 22 | ||||||
20 | 13.63%, 08/15/2018 | 19 | ||||||
1,259 | ||||||||
Health Care and Social Assistance - 0.3% | ||||||||
Amylin Pharmaceuticals, Inc. | ||||||||
15 | 3.00%, 06/15/2014۞ | 12 | ||||||
Biomet, Inc. | ||||||||
15 | 10.00%, 10/15/2017 | 16 | ||||||
10 | 10.38%, 10/15/2017 | 11 | ||||||
Cubist Pharmaceuticals, Inc. | ||||||||
10 | 2.25%, 06/15/2013۞ | 9 | ||||||
Elan Financial plc | ||||||||
10 | 4.44%, 11/15/2011 Δ | 9 | ||||||
HCA, Inc. | ||||||||
10 | 6.50%, 02/15/2016 | 9 | ||||||
83 | 9.63%, 11/15/2016 | 88 | ||||||
Inverness Medical Innovation, Inc. | ||||||||
20 | 9.00%, 05/15/2016 | 20 | ||||||
Rite Aid Corp. | ||||||||
15 | 9.75%, 06/12/2016 | 16 | ||||||
25 | 10.38%, 07/15/2016 | 25 | ||||||
Tenet Healthcare Corp. | ||||||||
15 | 9.00%, 05/01/2015 ■ | 16 | ||||||
231 | ||||||||
Information - 0.8% | ||||||||
Charter Communications Holdings II LLC | ||||||||
40 | 10.25%, 09/15/2010 - 10/01/2013 | 48 | ||||||
Charter Communications Operating LLC | ||||||||
15 | 10.00%, 04/30/2012 ■Y | 15 | ||||||
35 | 12.88%, 09/15/2014 ■Y | 39 | ||||||
Cricket Communications, Inc. | ||||||||
30 | 10.00%, 07/15/2015 | 30 | ||||||
CSC Holdings, Inc. | ||||||||
70 | 7.63%, 07/15/2018 | 72 | ||||||
Deluxe Corp. | ||||||||
35 | 7.38%, 06/01/2015 | 34 | ||||||
Frontier Communications Corp. | ||||||||
25 | 8.13%, 10/01/2018 | 25 | ||||||
10 | 8.25%, 05/01/2014 | 10 | ||||||
GCI, Inc. | ||||||||
25 | 7.25%, 02/15/2014 | 24 | ||||||
Intelsat Bermuda Ltd. | ||||||||
15 | 11.25%, 06/15/2016 | 16 | ||||||
Intelsat Intermediate Holdings Ltd. | ||||||||
15 | 0.00%, 02/01/2015 | 15 | ||||||
Intelsat Jackson Holdings Ltd. | ||||||||
10 | 8.50%, 11/01/2019 ■ | 10 | ||||||
55 | 9.50%, 06/15/2016 | 58 | ||||||
Mediacom Broadband LLC | ||||||||
45 | 8.50%, 10/15/2015 | 46 | ||||||
MetroPCS Wireless, Inc. | ||||||||
30 | 9.25%, 11/01/2014 | 30 | ||||||
Sprint Capital Corp. | ||||||||
10 | 6.90%, 05/01/2019 | 9 | ||||||
Sprint Nextel Corp. | ||||||||
42 | 6.00%, 12/01/2016 | 36 | ||||||
Terremark Worldwide, Inc. | ||||||||
20 | 12.00%, 06/15/2017 ■ | 22 | ||||||
539 | ||||||||
Machinery Manufacturing - 0.0% | ||||||||
Actuant Corp. | ||||||||
10 | 6.88%, 06/15/2017 | 9 | ||||||
Case New Holland, Inc. | ||||||||
15 | 7.13%, 03/01/2014 | 15 | ||||||
24 | ||||||||
Mining - 0.1% | ||||||||
Arch Coal, Inc. | ||||||||
5 | 8.75%, 08/01/2016 ■ | 5 | ||||||
Teck Cominco Ltd. | ||||||||
20 | 6.13%, 10/01/2035 | 17 | ||||||
Teck Resources Ltd. | ||||||||
10 | 10.75%, 05/15/2019 | 12 | ||||||
34 | ||||||||
Miscellaneous Manufacturing - 0.0% | ||||||||
ACCO Brands Corp. | ||||||||
15 | 7.63%, 08/15/2015 | 14 | ||||||
Motor Vehicle & Parts Manufacturing - 0.2% | ||||||||
Accuride Corp. | ||||||||
20 | 0.00%, 02/01/2015 W | 15 | ||||||
ArvinMeritor, Inc. | ||||||||
25 | 8.13%, 09/15/2015 | 22 | ||||||
ESCO Corp. | ||||||||
30 | 8.63%, 12/15/2013 ■ | 30 | ||||||
Ford Motor Co. | ||||||||
45 | 7.45%, 07/16/2031 | 37 | ||||||
Navistar International Corp. | ||||||||
9 | 3.00%, 10/15/2014۞ | 8 | ||||||
10 | 8.25%, 11/01/2021 | 10 | ||||||
Tenneco, Inc. | ||||||||
10 | 8.63%, 11/15/2014 | 9 | ||||||
TRW Automotive, Inc. | ||||||||
20 | 7.00%, 03/15/2014 ■ | 18 | ||||||
149 | ||||||||
Paper Manufacturing - 0.1% | ||||||||
Cascades, Inc. | ||||||||
15 | 7.25%, 02/15/2013 | 15 | ||||||
Neenah Paper, Inc. | ||||||||
25 | 7.38%, 11/15/2014 | 21 | ||||||
36 | ||||||||
Petroleum and Coal Products Manufacturing - 0.4% | ||||||||
Basic Energy Services, Inc. | ||||||||
10 | 11.63%, 08/01/2014 ■ | 10 | ||||||
Berry Petroleum Co. | ||||||||
15 | 10.25%, 06/01/2014 | 16 | ||||||
Chesapeake Energy Corp. | ||||||||
20 | 6.50%, 08/15/2017 | 19 | ||||||
Encore Acquisition Co. | ||||||||
15 | 6.00%, 07/15/2015 | 14 | ||||||
15 | 9.50%, 05/01/2016 | 16 |
13
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 6.7% - (continued) | ||||||||
Petroleum and Coal Products Manufacturing - 0.4% - (continued) | ||||||||
Headwaters, Inc. | ||||||||
$ | 50 | 11.38%, 11/01/2014 ■ | $ | 50 | ||||
Newfield Exploration Co. | ||||||||
25 | 7.13%, 05/15/2018 | 25 | ||||||
Petrohawk Energy Corp. | ||||||||
30 | 9.13%, 07/15/2013 | 31 | ||||||
Petroleos de Venezuela S.A. | ||||||||
25 | 5.38%, 04/12/2027 | 12 | ||||||
Petroleum Development Corp. | ||||||||
20 | 12.00%, 02/15/2018 | 20 | ||||||
Pioneer Natural Resources Co. | ||||||||
25 | 5.88%, 07/15/2016 | 23 | ||||||
Sandridge Energy, Inc. | ||||||||
25 | 8.00%, 06/01/2018 ■ | 25 | ||||||
Southwestern Energy Co. | ||||||||
10 | 7.50%, 02/01/2018 | 10 | ||||||
271 | ||||||||
Pipeline Transportation - 0.1% | ||||||||
Dynegy Holdings, Inc. | ||||||||
15 | 8.38%, 05/01/2016 | 14 | ||||||
El Paso Corp. | ||||||||
15 | 12.00%, 12/12/2013 | 17 | ||||||
Kinder Morgan Finance Co. | ||||||||
25 | 5.70%, 01/05/2016 | 24 | ||||||
55 | ||||||||
Plastics and Rubber Products Manufacturing - 0.1% | ||||||||
Plastipak Holdings, Inc. | ||||||||
10 | 10.63%, 08/15/2019 ■ | 11 | ||||||
Rock Tenn Co. | ||||||||
15 | 9.25%, 03/15/2016 | 16 | ||||||
Solo Cup Co. | ||||||||
15 | 10.50%, 11/01/2013 ■ | 16 | ||||||
43 | ||||||||
Primary Metal Manufacturing - 0.0% | ||||||||
Tube City IMS Corp. | ||||||||
25 | 9.75%, 02/01/2015 | 23 | ||||||
Printing and Related Support Activities - 0.1% | ||||||||
Harland Clarke Holdings | ||||||||
20 | 9.50%, 05/15/2015 | 19 | ||||||
Quebecor Media, Inc. | ||||||||
65 | 7.75%, 03/15/2016 | 64 | ||||||
83 | ||||||||
Professional, Scientific and Technical Services - 0.3% | ||||||||
Anixter International, Inc. | ||||||||
25 | 10.00%, 03/15/2014 | 27 | ||||||
Lamar Media Corp. | ||||||||
35 | 6.63%, 08/15/2015 | 33 | ||||||
Sensata Technologies | ||||||||
25 | 8.00%, 05/01/2014 | 24 | ||||||
Stream Global Services, Inc. | ||||||||
25 | 11.25%, 10/01/2014 ■ | 25 | ||||||
SunGard Data Systems, Inc. | ||||||||
40 | 10.25%, 08/15/2015 | 41 | ||||||
Unisys Corp. | ||||||||
22 | 12.75%, 10/15/2014 ■ | 24 | ||||||
16 | 14.25%, 09/15/2015 ■ | 17 | ||||||
191 | ||||||||
Real Estate and Rental and Leasing - 0.0% | ||||||||
PHH Corp. | ||||||||
8 | 4.00%, 09/01/2014۞■ | 7 | ||||||
United Rentals North America, Inc. | ||||||||
20 | 10.88%, 06/15/2016 ■ | 22 | ||||||
29 | ||||||||
Retail Trade - 0.4% | ||||||||
ACCO Brands Corp. | ||||||||
5 | 10.63%, 03/15/2015 ■ | 5 | ||||||
Affinia Group, Inc. | ||||||||
30 | 10.75%, 08/15/2016 ■ | 33 | ||||||
Catalina Marketing Corp. | ||||||||
20 | 10.50%, 10/01/2015 ■ | 20 | ||||||
Dollar General Corp. | ||||||||
20 | 11.88%, 07/15/2017 | 23 | ||||||
Federated Retail Holdings, Inc. | ||||||||
25 | 5.90%, 12/01/2016 | 23 | ||||||
Freedom Group, Inc. | ||||||||
5 | 10.25%, 08/01/2015 ■ | 5 | ||||||
Group 1 Automotive, Inc. | ||||||||
20 | 2.25%, 06/15/2036۞ Δ | 15 | ||||||
20 | 8.25%, 08/15/2013 | 20 | ||||||
HSN, Inc. | ||||||||
30 | 11.25%, 08/01/2016 | 33 | ||||||
Pantry, Inc. | ||||||||
20 | 3.00%, 11/15/2012۞ | 17 | ||||||
Sonic Automotive | ||||||||
8 | 5.00%, 10/01/2029۞ | 8 | ||||||
United Components, Inc. | ||||||||
90 | 9.38%, 06/15/2013 | 85 | ||||||
287 | ||||||||
Soap, Cleaning Compound, and Toilet Manufacturing - 0.0% | ||||||||
Sally Holdings LLC | ||||||||
20 | 10.50%, 11/15/2016 | 21 | ||||||
Transportation Equipment Manufacturing - 0.0% | ||||||||
American Rail Car Industries, Inc. | ||||||||
15 | 7.50%, 03/01/2014 | 14 | ||||||
Utilities - 0.4% | ||||||||
Calpine Corp. | ||||||||
40 | 7.25%, 10/15/2017 ■ | 38 | ||||||
Edison Mission Energy | ||||||||
15 | 7.20%, 05/15/2019 | 12 | ||||||
15 | 7.50%, 06/15/2013 | 14 | ||||||
Energy Future Holdings Corp. | ||||||||
55 | 10.88%, 11/01/2017 | 38 | ||||||
Ipalco Enterprises, Inc. | ||||||||
30 | 7.25%, 04/01/2016 ■ | 30 | ||||||
National Power Corp. | ||||||||
55 | 9.63%, 05/15/2028 | 68 |
14
Shares or Principal Amount ╬ | Market Value ╪ | |||||||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 6.7% - (continued) | ||||||||||||
Utilities - 0.4% - (continued) | ||||||||||||
NRG Energy, Inc. | ||||||||||||
$ | 40 | 7.38%, 01/15/2017 | $ | 39 | ||||||||
Sierra Pacific Resources | ||||||||||||
5 | 6.75%, 08/15/2017 | 5 | ||||||||||
TXU Corp. | ||||||||||||
30 | 5.55%, 11/15/2014 | 22 | ||||||||||
266 | ||||||||||||
Water Transportation - 0.1% | ||||||||||||
Navios Maritime Holdings | ||||||||||||
40 | 8.88%, 11/01/2017 ■ | 40 | ||||||||||
20 | 9.50%, 12/15/2014 | 20 | ||||||||||
Royal Caribbean Cruises Ltd. | ||||||||||||
10 | 11.88%, 07/15/2015 | 11 | ||||||||||
71 | ||||||||||||
Wholesale Trade - 0.1% | ||||||||||||
Alliance One International, Inc. | ||||||||||||
15 | 10.00%, 07/15/2016 ■ | 15 | ||||||||||
Associated Materials LLC | ||||||||||||
5 | 9.88%, 11/15/2016 ■ | 5 | ||||||||||
Building Materials Holdings Corp. | ||||||||||||
25 | 7.75%, 08/01/2014 | 25 | ||||||||||
45 | ||||||||||||
Total corporate bonds: non-investment grade (cost $4,404) | $ | 4,705 | ||||||||||
MUNICIPAL BONDS - 0.6% | ||||||||||||
General Obligations - 0.2% | ||||||||||||
California State GO, Taxable, | ||||||||||||
$ | 125 | 7.55%, 04/01/2039 | $ | 130 | ||||||||
Public Facilities - 0.1% | ||||||||||||
California Public Works Board, Board Lease Rev, | ||||||||||||
50 | 8.36%, 10/01/2034 | 50 | ||||||||||
Transportation - 0.3% | ||||||||||||
New Jersey State Turnpike Auth, Taxable, | ||||||||||||
50 | 7.41%, 01/01/2040 | 60 | ||||||||||
North Texas Tollway Auth Rev, | ||||||||||||
130 | 6.72%, 01/01/2049 | 141 | ||||||||||
201 | ||||||||||||
Total municipal bonds (cost $359) | $ | 381 | ||||||||||
Total long-term investments (cost $63,283) | $ | 66,922 | ||||||||||
SHORT-TERM INVESTMENTS - 3.8% | ||||||||||||
Repurchase Agreements - 3.8% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $107, collateralized by GNMA 5.00%, 2039, value of $110) | ||||||||||||
$ | 107 | 0.08%, 10/30/2009 | $ | 107 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $629, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $642) | ||||||||||||
629 | 0.08%, 10/30/2009 | 629 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $701, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $715) | ||||||||||||
701 | 0.08%, 10/30/2009 | 701 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $7, collateralized by U.S. Treasury Note 2.75%, 2013, value of $7) | ||||||||||||
7 | 0.05%, 10/30/2009 | 7 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,215, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $1,239) | ||||||||||||
1,215 | 0.07%, 10/30/2009 | 1,215 | ||||||||||
2,659 | ||||||||||||
Total short-term investments (cost $2,659) | $ | 2,659 | ||||||||||
Total investments (cost $65,942) ▲ | 99.2 | % | $ | 69,581 | ||||||||
Other assets and liabilities | 0.8 | % | 540 | |||||||||
Total net assets | 100.0 | % | $ | 70,121 | ||||||||
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 19.6% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $66,539 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 5,269 | ||
Unrealized Depreciation | (2,227 | ) | ||
Net Unrealized Appreciation | $ | 3,042 | ||
• | Currently non-income producing. | |
Δ | Variable rate securities; the rate reported is the coupon rate in effect at October 31, 2009. |
15
Schedule of Investments — (continued)
October 31, 2009
(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 October 31, 2009, was $4,658, which represents 6.65% 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 October 31, 2009, the market value of these securities amounted to $1,095 or 1.56% of total net assets. | |
♠ | Perpetual maturity security. Maturity date shown is the first call date. | |
۞ | Convertible security. | |
җ | Inflation-indexed bonds are securities in which the principal amount is adjusted for inflation and the interest payments equal a fixed percentage of the inflation-adjusted principal amount. | |
W | Debt security in default due to bankruptcy. | |
Y | 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. | |
BRL | — Brazilian Real | |
COP | — Colombian Peso | |
EUR | — EURO | |
HUF | — Hungarian Forint | |
ITL | — Italian Lira | |
MXP | — Mexican Peso | |
TRY | — New Turkish Lira | |
UYU | — Uruguayan Peso | |
GO | — General Obligations |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Brazilian Real (Buy) | $ | 41 | $ | 40 | 12/16/09 | $ | 1 | |||||||||
Brazilian Real (Buy) | 2 | 2 | 12/16/09 | — | ||||||||||||
Brazilian Real (Sell) | 70 | 67 | 12/16/09 | (3 | ) | |||||||||||
British Pound (Buy) | 46 | 46 | 11/03/09 | — | ||||||||||||
Chinese Renminbi (Buy) | 12 | 12 | 02/22/10 | — | ||||||||||||
Chinese Renminbi (Sell) | 12 | 12 | 02/22/10 | — | ||||||||||||
Chinese Renminbi (Buy) | 69 | 69 | 09/28/10 | — | ||||||||||||
Colombian Peso (Buy) | 2 | 2 | 11/25/09 | — | ||||||||||||
Colombian Peso (Sell) | 73 | 76 | 11/25/09 | 3 | ||||||||||||
Euro (Buy) | 6 | 6 | 11/03/09 | — | ||||||||||||
Euro (Sell) | 91 | 90 | 12/16/09 | (1 | ) | |||||||||||
Euro (Sell) | 6 | 6 | 12/16/09 | — | ||||||||||||
Ghana Cedi (Buy) | 6 | 6 | 01/25/10 | — | ||||||||||||
Israeli New Shekel (Buy) | 31 | 31 | 12/16/09 | — | ||||||||||||
Israeli New Shekel (Buy) | 4 | 4 | 12/16/09 | — | ||||||||||||
Mexican New Peso (Buy) | 5 | 5 | 12/16/09 | — | ||||||||||||
Mexican New Peso (Buy) | 4 | 4 | 12/16/09 | — | ||||||||||||
Mexican New Peso (Sell) | 26 | 25 | 12/16/09 | (1 | ) | |||||||||||
Polish Zloty (Buy) | 16 | 16 | 12/16/09 | — | ||||||||||||
Turkish New Lira (Sell) | 50 | 50 | 12/16/09 | — | ||||||||||||
Turkish New Lira (Sell) | 3 | 3 | 12/16/09 | — | ||||||||||||
Ukranian Hryvnia (Buy) | 12 | 12 | 07/22/10 | — | ||||||||||||
Ukranian Hryvnia (Sell) | 5 | 5 | 07/22/10 | — | ||||||||||||
Ukranian Hryvnia (Sell) | 7 | 7 | 07/22/10 | — | ||||||||||||
$ | (1 | ) | ||||||||||||||
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
10 Year U.S. Treasury Note | 14 | Short | Dec 2009 | $ | (4 | ) | ||||||||||
* | The number of contracts does not omit 000’s. Cash of $25 was pledged as initial margin deposit for open futures contracts at October 31, 2009. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
16
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Asset & Commercial Mortgage Backed Securities | $ | 578 | $ | — | $ | 578 | $ | — | ||||||||
Common Stocks ‡ | 29,895 | 28,439 | 1,456 | — | ||||||||||||
Corporate Bonds: Investment Grade | 31,284 | — | 31,122 | 162 | ||||||||||||
Corporate Bonds: Non-Investment Grade | 4,705 | — | 4,663 | 42 | ||||||||||||
Municipal Bonds | 381 | — | 381 | — | ||||||||||||
Preferred Stocks ‡ | 79 | 54 | 25 | — | ||||||||||||
Short-Term Investments | 2,659 | — | 2,659 | — | ||||||||||||
Total | $ | 69,581 | $ | 28,493 | $ | 40,884 | $ | 204 | ||||||||
Other Financial Instruments * | $ | 4 | $ | — | $ | 4 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 9 | $ | 4 | $ | 5 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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. |
Balance as of | Change in | Transfers In | Balance as of | |||||||||||||||||||||
October 31, | Realized Gain | Unrealized | and/or Out of | October 31, | ||||||||||||||||||||
2008 | (Loss) | Appreciation | Net Sales | Level 3 | 2009 | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Corporate Bonds | 224 | (67 | ) | 108 | * | (56 | ) | (5 | ) | 204 | ||||||||||||||
Total | $ | 224 | $ | (67 | ) | $ | 108 | $ | (56 | ) | $ | (5 | ) | $ | 204 | |||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $49. |
17
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $65,942) | $ | 69,581 | ||
Cash | 75 | * | ||
Foreign currency on deposit with custodian (cost $–) | — | |||
Unrealized appreciation on forward foreign currency contracts | 4 | |||
Receivables: | ||||
Investment securities sold | 513 | |||
Fund shares sold | 1,003 | |||
Dividends and interest | 638 | |||
Other assets | 41 | |||
Total assets | 71,855 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 5 | |||
Payables: | ||||
Investment securities purchased | 1,611 | |||
Fund shares redeemed | 64 | |||
Investment management fees | 8 | |||
Distribution fees | 4 | |||
Variation margin | 12 | |||
Accrued expenses | 22 | |||
Other liabilities | 8 | |||
Total liabilities | 1,734 | |||
Net assets | $ | 70,121 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 75,296 | |||
Accumulated undistributed net investment income | 217 | |||
Accumulated net realized loss on investments and foreign currency transactions | (9,026 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 3,634 | |||
Net assets | $ | 70,121 | ||
Shares authorized | 800,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 9.44/$9.99 | ||
Shares outstanding | 6,347 | |||
Net assets | $ | 59,923 | ||
Class B: Net asset value per share | $ | 9.40 | ||
Shares outstanding | 391 | |||
Net assets | $ | 3,681 | ||
Class C: Net asset value per share | $ | 9.40 | ||
Shares outstanding | 682 | |||
Net assets | $ | 6,409 | ||
Class Y: Net asset value per share | $ | 9.46 | ||
Shares outstanding | 11 | |||
Net assets | $ | 108 | ||
* | Cash of $25 was designated to cover open futures contracts. | |
The accompanying notes are an integral part of these financial statements. |
18
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 939 | ||
Interest | 1,829 | |||
Less: Foreign tax withheld | (17 | ) | ||
Total investment income | 2,751 | |||
Expenses: | ||||
Investment management fees | 347 | |||
Transfer agent fees | 78 | |||
Distribution fees | ||||
Class A | 101 | |||
Class B | 26 | |||
Class C | 47 | |||
Custodian fees | 18 | |||
Accounting services fees | 9 | |||
Registration and filing fees | 40 | |||
Board of Directors’ fees | 3 | |||
Audit fees | 6 | |||
Other expenses | 19 | |||
Total expenses (before waivers and fees paid indirectly) | 694 | |||
Expense waivers | (69 | ) | ||
Transfer agent fee waivers | (1 | ) | ||
Commission recapture | (2 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (72 | ) | ||
Total expenses, net | 622 | |||
Net Investment Income | 2,129 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (6,521 | ) | ||
Net realized gain on futures | 70 | |||
Net realized gain on forward foreign currency contracts | 80 | |||
Net realized loss on other foreign currency transactions | (100 | ) | ||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (6,471 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments: | ||||
Net unrealized appreciation of investments | 13,998 | |||
Net unrealized depreciation of futures | (7 | ) | ||
Net unrealized depreciation of forward foreign currency contracts | (92 | ) | ||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | — | |||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments | 13,899 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 7,428 | |||
Net Increase in Net Assets Resulting from Operations | $ | 9,557 | ||
19
(000’s Omitted)
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 2,129 | $ | 2,057 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (6,471 | ) | (2,526 | ) | ||||
Net unrealized appreciation (depreciation) of investments and other financial instruments | 13,899 | (11,847 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 9,557 | (12,316 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (1,814 | ) | (1,785 | ) | ||||
Class B | (103 | ) | (79 | ) | ||||
Class C | (181 | ) | (159 | ) | ||||
Class Y | (5 | ) | (5 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (167 | ) | |||||
Class B | — | (9 | ) | |||||
Class C | — | (18 | ) | |||||
Class Y | — | (1 | ) | |||||
Total distributions | (2,103 | ) | (2,223 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 17,136 | 8,506 | ||||||
Class B | 1,260 | 359 | ||||||
Class C | 1,680 | 1,103 | ||||||
Class Y | 5 | 5 | ||||||
Net increase from capital share transactions | 20,081 | 9,973 | ||||||
Net Increase (Decrease) In Net Assets | 27,535 | (4,566 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 42,586 | 47,152 | ||||||
End of period | $ | 70,121 | $ | 42,586 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 217 | $ | 212 | ||||
20
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
21
October 31, 2009
(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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Debt securities (other than short-term obligations) held by the Fund are valued using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Securities for which prices are not available from an independent pricing service may be 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 generally valued at amortized cost, which approximates market value. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s Valuation Time. | |||
Options contracts on securities, currencies, indices, futures contracts, commodities and other instruments shall be valued at their last reported sale 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 sale price at the Valuation Time on another exchange or market where it did trade. If it is not possible to determine the last reported sale price on the Primary Market or another 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. Absent both bid and asked prices on such exchange, the bid price may be used. | |||
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 and asked 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. |
22
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions – Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. |
23
October 31, 2009
(000’s Omitted)
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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | Forward Foreign Currency Contracts – The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 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 of the Fund are declared and paid quarterly. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 2009. |
24
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 October 31, 2009, the Fund had no outstanding when-issued or delayed delivery securities. | ||
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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||||
Interest rate contracts | Summary of Net Assets - Unrealized depreciation | $ | 4 | |||||||||
Foreign exchange contracts | Unrealized appreciation on forward foreign currency contracts | 4 | Unrealized depreciation on forward foreign currency contracts | 5 |
The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the year ended October 31, 2009. |
25
October 31, 2009
(000’s Omitted)
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | $ | — | $ | — | $ | 70 | $ | — | $ | — | $ | 70 | ||||||||||||
Foreign exchange contracts | — | — | — | 80 | — | 80 | ||||||||||||||||||
Total | $ | — | $ | — | $ | 70 | $ | 80 | $ | — | $ | 150 | ||||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | — | — | (7 | ) | — | — | $ | (7 | ) | |||||||||||||||
Foreign exchange contracts | — | — | — | (92 | ) | — | (92 | ) | ||||||||||||||||
Total | $ | — | $ | — | $ | (7 | ) | $ | (92 | ) | $ | — | $ | (99 | ) | |||||||||
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. | Futures and Options: |
Futures and Options Transactions – The Fund is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset 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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of October 31, 2009. | |||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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. |
26
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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. As of October 31, 2009, there were no outstanding purchased or written option contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) – Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings – 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 2,103 | $ | 2,204 | ||||
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). |
Amount | ||||
Undistributed Ordinary Income | $ | 216 | ||
Accumulated Capital Losses * | (8,434 | ) | ||
Unrealized Appreciation † | 3,043 | |||
Total Accumulated Deficit | $ | (5,175 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
27
October 31, 2009
(000’s Omitted)
d) | Reclassification of Capital Accounts – The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $21 and increase accumulated net realized gain on investments by $21. | ||
e) | Capital Loss Carryforward – At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 2,352 | ||
2017 | 6,082 | |||
Total | $ | 8,434 | ||
f) | Accounting for Uncertainty in Income Taxes – Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
5. | Expenses: |
a) | Investment Management Agreement – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 | % |
Effective October 1, 2009, HIFSCO has voluntarily agreed to waive management fees of 0.50% of average daily net assets until October 31, 2010. |
28
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 services 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 year ended October 31, 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 | % |
Effective October 1, 2009, HIFSCO has agreed to revise the voluntary limit on total operating expenses for the Fund, exclusive of taxes, interest, brokerage commissions, certain distribution expenses and extraordinary expenses. The voluntary limit on expenses is scheduled to end on October 31, 2010. The new expense limitation is as follows: |
Class A | Class B | Class C | Class Y | |||||||||
0.75% | 1.50 | % | 1.50 | % | 0.40 | % |
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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||
October 31, | October 31, | October 31, | October 31, | |||||||||||||
2009 | 2008 | 2007 | 2006 | |||||||||||||
Class A Shares | 1.19 | % | 1.25 | % | 1.19 | % | 1.25 | %* | ||||||||
Class B Shares | 1.89 | 2.00 | 2.00 | 2.00 | * | |||||||||||
Class C Shares | 1.94 | 2.00 | 2.00 | 2.00 | * | |||||||||||
Class Y Shares | 0.85 | 0.90 | 0.90 | 0.90 | * |
* | 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $628 and contingent deferred sales charges of $11 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 |
29
October 31, 2009
(000’s Omitted)
of the Fund 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 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 year ended October 31, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $74 for providing such services. These fees are accrued daily and paid monthly. |
6. | Affiliate Holdings: | |
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class Y | 11 |
7. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 48,174 | ||
Sales Proceeds Excluding U.S. Government Obligations | 29,418 |
30
8. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 4,095 | 212 | (2,403 | ) | — | 1,904 | 1,538 | 193 | (964 | ) | — | 767 | ||||||||||||||||||||||||||||
Amount | $ | 35,136 | $ | 1,774 | $ | (19,774 | ) | $ | — | $ | 17,136 | $ | 15,554 | $ | 1,923 | $ | (8,971 | ) | $ | — | $ | 8,506 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 264 | 11 | (121 | ) | — | 154 | 111 | 8 | (90 | ) | — | 29 | ||||||||||||||||||||||||||||
Amount | $ | 2,154 | $ | 97 | $ | (991 | ) | $ | — | $ | 1,260 | $ | 1,118 | $ | 83 | $ | (842 | ) | $ | — | $ | 359 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 331 | 20 | (158 | ) | — | 193 | 233 | 15 | (147 | ) | — | 101 | ||||||||||||||||||||||||||||
Amount | $ | 2,810 | $ | 165 | $ | (1,295 | ) | $ | — | $ | 1,680 | $ | 2,396 | $ | 151 | $ | (1,444 | ) | $ | — | $ | 1,103 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | 1 | — | — | 1 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 5 | $ | — | $ | — | $ | 5 | $ | — | $ | 5 | $ | — | $ | — | $ | 5 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 6 | $ | 53 | |||||
For the Year Ended October 31, 2008 | 3 | $ | 33 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. | ||
11. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
31
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.22 | $ | 0.38 | $ | — | $ | 1.23 | $ | 1.61 | $ | (0.39 | ) | $ | — | $ | — | $ | (0.39 | ) | $ | 1.22 | $ | 9.44 | ||||||||||||||||||||
B | 8.20 | 0.31 | — | 1.23 | 1.54 | (0.34 | ) | — | — | (0.34 | ) | 1.20 | 9.40 | |||||||||||||||||||||||||||||||
C | 8.19 | 0.31 | — | 1.23 | 1.54 | (0.33 | ) | — | — | (0.33 | ) | 1.21 | 9.40 | |||||||||||||||||||||||||||||||
Y | 8.24 | 0.42 | — | 1.22 | 1.64 | (0.42 | ) | — | — | (0.42 | ) | 1.22 | 9.46 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 10.98 | 0.33 | — | (2.74 | ) | (2.41 | ) | (0.33 | ) | (0.04 | ) | — | (0.37 | ) | (2.78 | ) | 8.20 | |||||||||||||||||||||||||||
C | 10.97 | 0.33 | — | (2.74 | ) | (2.41 | ) | (0.33 | ) | (0.04 | ) | — | (0.37 | ) | (2.78 | ) | 8.19 | |||||||||||||||||||||||||||
Y | 11.03 | 0.44 | — | (2.75 | ) | (2.31 | ) | (0.44 | ) | (0.04 | ) | — | (0.48 | ) | (2.79 | ) | 8.24 | |||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.42 | 0.34 | — | 0.59 | 0.93 | (0.33 | ) | — | — | (0.33 | ) | 0.60 | 11.02 | |||||||||||||||||||||||||||||||
B | 10.41 | 0.26 | — | 0.59 | 0.85 | (0.28 | ) | — | — | (0.28 | ) | 0.57 | 10.98 | |||||||||||||||||||||||||||||||
C | 10.41 | 0.26 | — | 0.58 | 0.84 | (0.28 | ) | — | — | (0.28 | ) | 0.56 | 10.97 | |||||||||||||||||||||||||||||||
Y | 10.42 | 0.41 | — | 0.56 | 0.97 | (0.36 | ) | — | — | (0.36 | ) | 0.61 | 11.03 | |||||||||||||||||||||||||||||||
From (commencement of operations) July 31, 2006, through October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A(f) | 10.00 | 0.09 | — | 0.39 | 0.48 | (0.06 | ) | — | — | (0.06 | ) | 0.42 | 10.42 | |||||||||||||||||||||||||||||||
B(f) | 10.00 | 0.07 | — | 0.38 | 0.45 | (0.04 | ) | — | — | (0.04 | ) | 0.41 | 10.41 | |||||||||||||||||||||||||||||||
C(f) | 10.00 | 0.06 | — | 0.40 | 0.46 | (0.05 | ) | — | — | (0.05 | ) | 0.41 | 10.41 | |||||||||||||||||||||||||||||||
Y(f) | 10.00 | 0.10 | — | 0.38 | 0.48 | (0.06 | ) | — | — | (0.06 | ) | 0.42 | 10.42 |
(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) | Commenced operations on July 31, 2006. | |
(g) | Not annualized. | |
(h) | Annualized. |
32
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net | |||||||||||||||||||||
Net Assets at End | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | of Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Rate(d) | ||||||||||||||||||
20.29% | $ | 59,923 | 1.32 | % | 1.19 | % | 1.19 | % | 4.56 | % | 63 | % | ||||||||||||
19.37 | 3,681 | 2.26 | 1.90 | 1.90 | 3.80 | — | ||||||||||||||||||
19.44 | 6,409 | 2.10 | 1.94 | 1.94 | 3.81 | — | ||||||||||||||||||
20.67 | 108 | 0.94 | 0.85 | 0.85 | 4.96 | — | ||||||||||||||||||
(22.01) | 36,544 | 1.25 | 1.25 | 1.25 | 4.10 | 44 | ||||||||||||||||||
(22.53) | 1,945 | 2.14 | 2.00 | 2.00 | 3.35 | — | ||||||||||||||||||
(22.55) | 4,007 | 2.04 | 2.00 | 2.00 | 3.34 | — | ||||||||||||||||||
(21.67) | 90 | 0.91 | 0.90 | 0.90 | 4.43 | — | ||||||||||||||||||
9.07 | 40,501 | 1.33 | 1.19 | 1.19 | 3.57 | 27 | ||||||||||||||||||
8.22 | 2,280 | 2.21 | 2.00 | 2.00 | 2.76 | — | ||||||||||||||||||
8.17 | 4,256 | 2.14 | 2.00 | 2.00 | 2.76 | — | ||||||||||||||||||
9.43 | 115 | 1.04 | 0.90 | 0.90 | 3.86 | — | ||||||||||||||||||
4.78 (g) | 11,513 | 1.58 | (h) | 1.26 | (h) | 1.26 | (h) | 3.48 | (h) | 8 | ||||||||||||||
4.54 (g) | 304 | 2.34 | (h) | 2.00 | (h) | 2 .00 | (h) | 2.73 | (h) | — | ||||||||||||||
4.56 (g) | 400 | 2.39 | (h) | 2.00 | (h) | 2.00 | (h) | 2.67 | (h) | — | ||||||||||||||
4.83 (g) | 105 | 1.31 | (h) | 0.90 | (h) | 0.90 | (h) | 3.86 | (h) | — |
33
The Hartford Mutual Funds, Inc.
December 15, 2009
34
Sandra S. Jaffee (1941) Director since 2005 |
35
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
36
37
DRD* | 40.00 | % | ||
QDI† | 50.00 | % | ||
QII‡ | 60.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. | |
‡ | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.388 | N/A | N/A | 0.388 | ||||||||||||
Class B | 0.338 | N/A | N/A | 0.338 | ||||||||||||
Class C | 0.332 | N/A | N/A | 0.332 | ||||||||||||
Class Y | 0.419 | N/A | N/A | 0.419 |
38
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,207.80 | $ | 6.40 | $ | 1,000.00 | $ | 1,019.41 | $ | 5.85 | 1.15 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,202.00 | $ | 10.38 | $ | 1,000.00 | $ | 1,015.78 | $ | 9.50 | 1.87 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,203.20 | $ | 10.55 | $ | 1,000.00 | $ | 1,015.63 | $ | 9.65 | 1.90 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,210.70 | $ | 4.51 | $ | 1,000.00 | $ | 1,021.12 | $ | 4.13 | 0.81 | 184 | 365 |
39
40
41
42
43
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
12 | ||||
22 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 | ||||
29 | ||||
30 |
(subadvised by Wellington Management Company, LLP) |
Performance Overview(1) 10/31/99 — 10/31/09 Growth of a $10,000 investment in Class A which includes Sales Charge | Investment objective — Seeks growth of capital. |
1 | 5 | 10 | ||||||||||
Year | Year | Year | ||||||||||
Capital Appreciation A# | 21.45 | % | 3.81 | % | 6.08 | % | ||||||
Capital Appreciation A## | 14.77 | % | 2.64 | % | 5.48 | % | ||||||
Capital Appreciation B# | 20.50 | % | 2.98 | % | NA | * | ||||||
Capital Appreciation B## | 15.50 | % | 2.67 | % | NA | * | ||||||
Capital Appreciation C# | 20.60 | % | 3.07 | % | 5.36 | % | ||||||
Capital Appreciation C## | 19.60 | % | 3.07 | % | 5.36 | % | ||||||
Capital Appreciation I# | 21.89 | % | 4.02 | % | 6.19 | % | ||||||
Capital Appreciation R3# | 21.13 | % | 3.82 | % | 6.37 | % | ||||||
Capital Appreciation R4# | 21.58 | % | 4.03 | % | 6.48 | % | ||||||
Capital Appreciation R5# | 21.94 | % | 4.20 | % | 6.56 | % | ||||||
Capital Appreciation Y# | 22.06 | % | 4.27 | % | 6.60 | % | ||||||
Russell 3000 Index | 10.83 | % | 0.71 | % | -0.14 | % | ||||||
S&P 500 Index | 9.78 | % | 0.33 | % | -0.95 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year 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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||
Saul J. Pannell, CFA | Frank D. Catrickes, CFA, CMT | |
Senior Vice President, Partner | Senior Vice President, Partner |
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Equity Securities | ||||
Automobiles & Components (Consumer Discretionary) | 3.2 | % | ||
Banks (Financials) | 4.0 | |||
Capital Goods (Industrials) | 5.1 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 1.6 | |||
Consumer Services (Consumer Discretionary) | 0.6 | |||
Diversified Financials (Financials) | 6.0 | |||
Energy (Energy) | 9.6 | |||
Food & Staples Retailing (Consumer Staples) | 0.9 | |||
Food, Beverage & Tobacco (Consumer Staples) | 1.5 | |||
Health Care Equipment & Services (Health Care) | 7.7 | |||
Insurance (Financials) | 4.8 | |||
Materials (Materials) | 8.1 | |||
Media (Consumer Discretionary) | 1.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 14.2 | |||
Real Estate (Financials) | 0.9 | |||
Retailing (Consumer Discretionary) | 6.7 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 1.8 | |||
Software & Services (Information Technology) | 6.8 | |||
Technology Hardware & Equipment (Information Technology) | 9.9 | |||
Telecommunication Services (Services) | 1.3 | |||
Transportation (Industrials) | 1.2 | |||
Fixed Income Securities | ||||
Finance and Insurance (Finance) | 0.2 | |||
Short-Term Investments | 3.4 | |||
Other Assets and Liabilities | (1.4 | ) | ||
Total | 100.0 | % | ||
3
as of October 31, 2009
Percentage of | ||||
Country | Net Assets | |||
Austria | 0.7 | % | ||
Brazil | 2.1 | |||
Canada | 4.5 | |||
China | 0.7 | |||
Germany | 1.1 | |||
Hong Kong | 1.4 | |||
India | 0.3 | |||
Israel | 1.8 | |||
Japan | 1.1 | |||
Netherlands | 0.9 | |||
Russia | 0.9 | |||
Singapore | 0.9 | |||
South Africa | 1.4 | |||
Sweden | 0.4 | |||
Switzerland | 4.7 | |||
Taiwan | 2.3 | |||
Turkey | 0.5 | |||
United Kingdom | 2.3 | |||
United States | 70.0 | |||
Short-Term Investments | 3.4 | |||
Other Assets and Liabilities | (1.4 | ) | ||
Total | 100.0 | % | ||
4
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 97.8% | ||||||||
Automobiles & Components - 3.2% | ||||||||
79,377 | Ford Motor Co. • | $ | 555,640 | |||||
Banks - 4.0% | ||||||||
9,457 | Banco Santander Brasil S.A. | 112,154 | ||||||
6,409 | Standard Chartered plc | 157,230 | ||||||
21,654 | Turkiye Garanti Bankasi A.S. | 78,637 | ||||||
12,533 | Wells Fargo & Co. | 344,917 | ||||||
692,938 | ||||||||
Capital Goods - 5.1% | ||||||||
1,486 | Fluor Corp. | 66,013 | ||||||
25,139 | General Electric Co. | 358,481 | ||||||
6,321 | Raytheon Co. | 286,211 | ||||||
2,083 | Siemens AG | 188,273 | ||||||
898,978 | ||||||||
Consumer Durables & Apparel - 1.6% | ||||||||
10,000 | Newell Rubbermaid, Inc. | 145,100 | ||||||
170 | NVR, Inc. • | 112,569 | ||||||
2,159 | Pulte Homes, Inc. | 19,454 | ||||||
277,123 | ||||||||
Consumer Services - 0.6% | ||||||||
3,525 | Educomp Solutions Ltd. | 59,353 | ||||||
30,000 | Shangri-La Asia Ltd. | 57,704 | ||||||
117,057 | ||||||||
Diversified Financials - 6.0% | ||||||||
1,000 | American Capital Ltd. | 2,680 | ||||||
776 | Ameriprise Financial, Inc. | 26,896 | ||||||
14,000 | Bank of America Corp. | 204,120 | ||||||
7,959 | Excel Medical Fund L.P. ⌂•†Ћ | 7,811 | ||||||
3,613 | GAM Holding Ltd. | 44,075 | ||||||
3,619 | Goldman Sachs Group, Inc. | 615,871 | ||||||
3,613 | Julius Baer Group Ltd. | 136,000 | ||||||
1,037,453 | ||||||||
Energy - 9.6% | ||||||||
4,709 | Baker Hughes, Inc. | 198,120 | ||||||
4,487 | Cameco Corp. | 122,091 | ||||||
2,634 | Dresser-Rand Group, Inc. • | 77,614 | ||||||
4,044 | Exxon Mobil Corp. | 289,826 | ||||||
7,587 | Halliburton Co. | 221,605 | ||||||
3,121 | National Oilwell Varco, Inc. • | 127,922 | ||||||
6,250 | OAO Gazprom Class S ADR | 150,938 | ||||||
3,000 | OMV AG | 123,627 | ||||||
2,855 | Petroleo Brasileiro S.A. ADR | 131,939 | ||||||
5,887 | Suncor Energy, Inc. | 194,385 | ||||||
1,000 | XTO Energy, Inc. | 41,560 | ||||||
1,679,627 | ||||||||
Food & Staples Retailing - 0.9% | ||||||||
85,047 | Olam International Ltd. | 163,256 | ||||||
Food, Beverage & Tobacco - 1.5% | ||||||||
5,599 | Kirin Brewery Co., Ltd. | 91,386 | ||||||
2,623 | Nestle S.A. | 121,986 | ||||||
1,547 | Unilever N.V. CVA | 47,657 | ||||||
261,029 | ||||||||
Health Care Equipment & Services - 7.7% | ||||||||
34,944 | Boston Scientific Corp. • | 283,747 | ||||||
3,397 | Covidien plc | 143,096 | ||||||
6,709 | McKesson Corp. | 394,043 | ||||||
4,500 | Medtronic, Inc. | 160,650 | ||||||
14,104 | UnitedHealth Group, Inc. | 365,993 | ||||||
1,347,529 | ||||||||
Insurance - 4.8% | ||||||||
13,543 | ACE Ltd. | 695,556 | ||||||
5,896 | Marsh & McLennan Cos., Inc. | 138,327 | ||||||
833,883 | ||||||||
Materials - 8.1% | ||||||||
4,664 | AngloGold Ltd. ADR | 175,075 | ||||||
3,466 | Aracruz Celulose S.A. ADR • | 64,528 | ||||||
1,828 | Freeport-McMoRan Copper & Gold, Inc. | 134,131 | ||||||
39,001 | Huabao International Holdings Ltd. | 37,201 | ||||||
4,501 | Newmont Mining Corp. | 195,631 | ||||||
2,193 | Potash Corp. of Saskatchewan, Inc. | 203,476 | ||||||
1,186 | Praxair, Inc. | 94,188 | ||||||
9,005 | Teck Cominco Ltd. Class B | 260,428 | ||||||
7,144 | Vedanta Resources plc | 244,453 | ||||||
1,409,111 | ||||||||
Media - 1.9% | ||||||||
25 | Harvey Weinstein Co. Holdings Class A-1 ⌂•† | — | ||||||
4,227 | Viacom, Inc. Class B • | 116,620 | ||||||
7,977 | Walt Disney Co. | 218,317 | ||||||
334,937 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 14.2% | ||||||||
1,790 | Abbott Laboratories | 90,526 | ||||||
2,168 | Amgen, Inc. • | 116,508 | ||||||
4,240 | Bristol-Myers Squibb Co. | 92,440 | ||||||
5,575 | Daiichi Sankyo Co., Ltd. | 108,914 | ||||||
845 | Gilead Sciences, Inc. • | 35,959 | ||||||
13,541 | Merck & Co., Inc. | 418,823 | ||||||
30,946 | Pfizer, Inc. | 527,017 | ||||||
3,211 | Roche Holding AG | 514,244 | ||||||
9,565 | Schering-Plough Corp. | 269,730 | ||||||
6,100 | Teva Pharmaceutical Industries Ltd. ADR | 307,943 | ||||||
2,482,104 | ||||||||
Real Estate - 0.9% | ||||||||
33,643 | China Overseas Land & Investment Ltd. | 72,531 | ||||||
5,353 | Sun Hung Kai Properties Ltd. | 81,107 | ||||||
153,638 | ||||||||
Retailing - 6.7% | ||||||||
2,064 | Amazon.com, Inc. • | 245,224 | ||||||
1,657 | Best Buy Co., Inc. | 63,276 | ||||||
36,752 | Buck Holdings L.P. ⌂•† | 46,041 | ||||||
4,574 | Gap, Inc. | 97,605 | ||||||
1,474 | Sherwin-Williams Co. | 84,048 | ||||||
20,369 | Staples, Inc. | 441,999 | ||||||
4,825 | TJX Cos., Inc. | 180,225 | ||||||
1,158,418 | ||||||||
Semiconductors & Semiconductor Equipment - 1.8% | ||||||||
4,212 | ASML Holding N.V. ADR | 113,459 | ||||||
3,500 | Lam Research Corp. • | 118,020 | ||||||
8,479 | Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 80,892 | ||||||
312,371 | ||||||||
Software & Services - 6.8% | ||||||||
7,188 | Activision Blizzard, Inc. • | 77,840 | ||||||
8,340 | Cia Brasileira de Meios de Pagamentos | 76,742 | ||||||
715 | Google, Inc. • | 383,218 | ||||||
783 | Mastercard, Inc. | 171,493 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 97.8% — (continued) | ||||||||||||
Software & Services - 6.8% — (continued) | ||||||||||||
13,082 | Oracle Corp. | $ | 276,022 | |||||||||
2,213 | Sohu.com, Inc. • | 123,043 | ||||||||||
4,784 | Western Union Co. | 86,928 | ||||||||||
1,195,286 | ||||||||||||
Technology Hardware & Equipment - 9.9% | ||||||||||||
1,225 | Apple, Inc. • | 230,837 | ||||||||||
16,117 | Cisco Systems, Inc. • | 368,269 | ||||||||||
2,918 | Corning, Inc. | 42,631 | ||||||||||
2,282 | EMC Corp. • | 37,578 | ||||||||||
78,714 | Hon Hai Precision Industry Co., Ltd. | 308,308 | ||||||||||
2,979 | IBM Corp. | 359,237 | ||||||||||
11,319 | Motorola, Inc. | 97,006 | ||||||||||
5,037 | Qualcomm, Inc. | 208,582 | ||||||||||
6,979 | Telefonaktiebolaget LM Ericsson ADR | 72,578 | ||||||||||
1,725,026 | ||||||||||||
Telecommunication Services - 1.3% | ||||||||||||
6,000 | AT&T, Inc. | 154,020 | ||||||||||
5,314 | MTN Group Ltd. | 79,123 | ||||||||||
233,143 | ||||||||||||
Transportation - 1.2% | ||||||||||||
14,555 | Delta Air Lines, Inc. • | 103,921 | ||||||||||
1,331 | FedEx Corp. | 96,758 | ||||||||||
200,679 | ||||||||||||
Total common stocks (cost $16,537,524) | $ | 17,069,226 | ||||||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 0.2% | ||||||||||||
Finance and Insurance - 0.2% | ||||||||||||
MBIA Insurance Co. | ||||||||||||
$ | 95,840 | 14.00%, 01/15/2033 ■Δ | $ | 41,211 | ||||||||
Total corporate bonds: non-investment grade (cost $95,208) | $ | 41,211 | ||||||||||
Total long-term investments (cost $16,632,732) | $ | 17,110,437 | ||||||||||
SHORT-TERM INVESTMENTS - 3.4% | ||||||||||||
Repurchase Agreements - 3.4% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $23,970, collateralized by GNMA 5.00%, 2039, value of $24,450) | ||||||||||||
$ | 23,970 | 0.08%, 10/30/2009 | $ | 23,970 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $140,429, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $143,237) | ||||||||||||
140,428 | 0.08%, 10/30/2009 | 140,428 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $156,434, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $159,561) | ||||||||||||
$ | 156,433 | 0.08%, 10/30/2009 | $ | 156,433 | ||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,585, collateralized by U.S. Treasury Note 2.75%, 2013, value of $1,605) | ||||||||||||
1,585 | 0.05%, 10/30/2009 | 1,585 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $271,049, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $276,469) | ||||||||||||
271,047 | 0.07%, 10/30/2009 | 271,047 | ||||||||||
593,463 | ||||||||||||
Total short-term investments (cost $593,463) | $ | 593,463 | ||||||||||
Total investments (cost $17,226,195) ▲ | 101.4 | % | $ | 17,703,900 | ||||||||
Other assets and liabilities | (1.4 | )% | (246,414 | ) | ||||||||
Total net assets | 100.0 | % | $ | 17,457,486 | ||||||||
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 28.0% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $17,357,043 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 1,627,882 | ||
Unrealized Depreciation | (1,281,025 | ) | ||
Net Unrealized Appreciation | $ | 346,857 | ||
† | 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 October 31, 2009, was $53,852, which represents 0.31% of total net assets. This amount excludes securities that are principally traded in certain foreign markets and whose prices are adjusted pursuant to a third party pricing service methodology approved by the Board of Directors. | |
• | Currently non-income producing. |
6
D | Variable rate securities; the rate reported is the coupon rate in effect at October 31, 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 October 31, 2009, was $41,211, which represents 0.24% of total net assets. | |
Ћ | As of October 31, 2009, the Fund has future commitments to purchase an additional $23,374. | |
⌂ | 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 - 09/2009 | 7,959 | Excel Medical Fund L.P. | 7,959 | |||||||||
10/2005 | 25 | Harvey Weinstein Co. Holdings Class A-1 - Reg D | 23,636 |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Hong Kong Dollar (Sell) | $ | 17,655 | $ | 17,655 | 11/02/09 | $ | — | |||||||||
Japanese Yen (Buy) | 41,283 | 40,821 | 11/02/09 | 462 | ||||||||||||
Japanese Yen (Buy) | 41,454 | 41,133 | 11/04/09 | 321 | ||||||||||||
Japanese Yen (Buy) | 14,372 | 14,223 | 11/05/09 | 149 | ||||||||||||
Singapore Dollar (Buy) | 3,312 | 3,312 | 11/02/09 | — | ||||||||||||
Singapore Dollar (Buy) | 1,482 | 1,484 | 11/03/09 | (2 | ) | |||||||||||
$ | 930 | |||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
7
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Automobiles & Components | $ | 555,640 | $ | 555,640 | $ | — | $ | — | ||||||||
Banks | 692,938 | 457,071 | 235,867 | — | ||||||||||||
Capital Goods | 898,978 | 710,705 | 188,273 | — | ||||||||||||
Consumer Durables & Apparel | 277,123 | 277,123 | — | — | ||||||||||||
Consumer Services | 117,057 | — | 117,057 | — | ||||||||||||
Diversified Financials | 1,037,453 | 985,567 | 44,075 | 7,811 | ||||||||||||
Energy | 1,679,627 | 1,556,000 | 123,627 | — | ||||||||||||
Food & Staples Retailing | 163,256 | — | 163,256 | — | ||||||||||||
Food, Beverage & Tobacco | 261,029 | — | 261,029 | — | ||||||||||||
Health Care Equipment & Services | 1,347,529 | 1,347,529 | — | — | ||||||||||||
Insurance | 833,883 | 833,883 | — | — | ||||||||||||
Materials | 1,409,111 | 1,127,457 | 281,654 | — | ||||||||||||
Media | 334,937 | 334,937 | — | — | ||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences | 2,482,104 | 1,858,946 | 623,158 | — | ||||||||||||
Real Estate | 153,638 | — | 153,638 | — | ||||||||||||
Retailing | 1,158,418 | 1,112,377 | — | 46,041 | ||||||||||||
Semiconductors & Semiconductor Equipment | 312,371 | 312,371 | — | — | ||||||||||||
Software & Services | 1,195,286 | 1,195,286 | — | — | ||||||||||||
Technology Hardware & Equipment | 1,725,026 | 1,416,718 | 308,308 | — | ||||||||||||
Telecommunication Services | 233,143 | 154,020 | 79,123 | — | ||||||||||||
Transportation | 200,679 | 200,679 | — | — | ||||||||||||
Total | 17,069,226 | 14,436,309 | 2,579,065 | 53,852 | ||||||||||||
Corporate Bonds: Non-Investment Grade | 41,211 | — | 41,211 | — | ||||||||||||
Short-Term Investments | 593,463 | — | 593,463 | — | ||||||||||||
Total | $ | 17,703,900 | $ | 14,436,309 | $ | 3,213,739 | $ | 53,852 | ||||||||
Other Financial Instruments * | $ | 932 | $ | — | $ | 932 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 2 | $ | — | $ | 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. |
Balance as of | Change in | Transfers In | Balance as of | |||||||||||||||||||||
October 31, | Unrealized | and/or Out of | October 31, | |||||||||||||||||||||
2008 | Appreciation | Net Purchases | Level 3 | 2009 | ||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Common Stock | 44,655 | 3,963 | * | 5,234 | — | 53,852 | ||||||||||||||||||
Corporate Bonds | 15,980 | — | † | — | (15,980 | ) | — | |||||||||||||||||
Total | $ | 60,635 | $ | 3,963 | $ | 5,234 | $ | (15,980 | ) | $ | 53,852 | |||||||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $3,963. | |
† | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $—. |
8
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $17,226,195) | $ | 17,703,900 | ||
Cash | — | |||
Foreign currency on deposit with custodian (cost $38) | 38 | |||
Unrealized appreciation on forward foreign currency contracts | 932 | |||
Receivables: | ||||
Investment securities sold | 82,163 | |||
Fund shares sold | 55,667 | |||
Dividends and interest | 26,639 | |||
Other assets | 410 | |||
Total assets | 17,869,749 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 2 | |||
Payables: | ||||
Investment securities purchased | 369,595 | |||
Fund shares redeemed | 35,414 | |||
Investment management fees | 1,921 | |||
Distribution fees | 1,057 | |||
Accrued expenses | 4,274 | |||
Total liabilities | 412,263 | |||
Net assets | $ | 17,457,486 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 21,193,443 | |||
Accumulated distribution in excess of net investment income | (471 | ) | ||
Accumulated net realized loss on investments and foreign currency transactions | (4,213,618 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 478,132 | |||
Net assets | $ | 17,457,486 | ||
Shares authorized | 1,415,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 28.02/$29.65 | ||
Shares outstanding | 322,601 | |||
Net assets | $ | 9,038,634 | ||
Class B: Net asset value per share | $ | 24.95 | ||
Shares outstanding | 41,184 | |||
Net assets | $ | 1,027,505 | ||
Class C: Net asset value per share | $ | 25.07 | ||
Shares outstanding | 115,901 | |||
Net assets | $ | 2,905,481 | ||
Class I: Net asset value per share | $ | 27.94 | ||
Shares outstanding | 93,668 | |||
Net assets | $ | 2,616,775 | ||
Class R3: Net asset value per share | $ | 29.67 | ||
Shares outstanding | 1,032 | |||
Net assets | $ | 30,633 | ||
Class R4: Net asset value per share | $ | 29.96 | ||
Shares outstanding | 6,340 | |||
Net assets | $ | 189,912 | ||
Class R5: Net asset value per share | $ | 30.15 | ||
Shares outstanding | 5,759 | |||
Net assets | $ | 173,619 | ||
Class Y: Net asset value per share | $ | 30.24 | ||
Shares outstanding | 48,768 | |||
Net assets | $ | 1,474,927 | ||
9
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 244,388 | ||
Interest | 16,828 | |||
Securities lending | 375 | |||
Less: Foreign tax withheld | (10,826 | ) | ||
Total investment income | 250,765 | |||
Expenses: | ||||
Investment management fees | 93,440 | |||
Administrative services fees | 313 | |||
Transfer agent fees | 31,706 | |||
Distribution fees | ||||
Class A | 20,948 | |||
Class B | 9,621 | |||
Class C | 24,977 | |||
Class R3 | 83 | |||
Class R4 | 310 | |||
Custodian fees | 290 | |||
Accounting services fees | 2,298 | |||
Registration and filing fees | 897 | |||
Board of Directors’ fees | 335 | |||
Audit fees | 490 | |||
Other expenses | 4,414 | |||
Total expenses (before waivers and fees paid indirectly) | 190,122 | |||
Transfer agent fee waivers | (480 | ) | ||
Commission recapture | (1,132 | ) | ||
Custodian fee offset | (1 | ) | ||
Total waivers and fees paid indirectly | (1,613 | ) | ||
Total expenses, net | 188,509 | |||
Net Investment Income | 62,256 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (3,531,499 | ) | ||
Net realized gain on forward foreign currency contracts | 19,820 | |||
Net realized loss on other foreign currency transactions | (13,738 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions | (3,525,417 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 6,399,480 | |||
Net unrealized depreciation of forward foreign currency contracts | (97,777 | ) | ||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (567 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 6,301,136 | |||
Net Gain on Investments and Foreign Currency Transactions | 2,775,719 | |||
Net Increase in Net Assets Resulting from Operations | $ | 2,837,975 | ||
10
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 62,256 | $ | 69,932 | ||||
Net realized loss on investments and foreign currency transactions | (3,525,417 | ) | (775,078 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 6,301,136 | (10,190,594 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 2,837,975 | (10,895,740 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (116,255 | ) | — | |||||
Class B | (2,378 | ) | — | |||||
Class C | (12,361 | ) | — | |||||
Class I | (8,404 | ) | — | |||||
Class R3 | (160 | ) | — | |||||
Class R4 | (1,505 | ) | — | |||||
Class R5 | (687 | ) | — | |||||
Class Y | (20,079 | ) | — | |||||
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 | ) | |||||
From tax return of capital | ||||||||
Class A | (277 | ) | — | |||||
Class B | (37 | ) | — | |||||
Class C | (92 | ) | — | |||||
Class I | (15 | ) | — | |||||
Class R3 | — | — | ||||||
Class R4 | (3 | ) | — | |||||
Class R5 | (1 | ) | — | |||||
Class Y | (34 | ) | — | |||||
Total distributions | (162,288 | ) | (1,797,962 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (1,190,158 | ) | 2,958,023 | |||||
Class B | (204,907 | ) | (25,704 | ) | ||||
Class C | (173,549 | ) | 775,400 | |||||
Class I | 1,959,232 | 501,432 | ||||||
Class R3 | 18,462 | 11,592 | ||||||
Class R4 | 86,282 | 99,010 | ||||||
Class R5 | 115,006 | 54,478 | ||||||
Class Y | 155,694 | 820,275 | ||||||
Net increase from capital share transactions | 766,062 | 5,194,506 | ||||||
Net Increase (Decrease) In Net Assets | 3,441,749 | (7,499,196 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 14,015,737 | 21,514,933 | ||||||
End of period | $ | 17,457,486 | $ | 14,015,737 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | (471 | ) | $ | 63,604 | |||
11
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
12
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Debt securities (other than short-term obligations) held by the Fund are valued using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Securities for which prices are not available from an independent pricing service may be 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 generally valued at amortized cost, which approximates market value. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
• | 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 |
14
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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||
Foreign exchange contracts | Unrealized appreciation on forward | $932 | Unrealized depreciation on forward | $2 | ||||
foreign currency contracts | foreign currency contracts |
The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the year ended October 31, 2009. | |||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | 19,820 | $ | — | $ | 19,820 | ||||||||||||
Total | $ | — | $ | — | $ | — | $ | 19,820 | $ | — | $ | 19,820 | ||||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | (97,777 | ) | — | $ | (97,777 | ) | |||||||||||||||
Total | $ | — | $ | — | $ | — | $ | (97,777 | ) | $ | — | $ | (97,777 | ) | ||||||||||
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 |
16
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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 161,829 | $ | 474,292 | ||||
Long-Term Capital Gains * | — | 1,323,670 | ||||||
Tax Return of Capital | 459 | — |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Accumulated Capital Losses * | $ | (4,082,770 | ) | |
Unrealized Appreciation † | 346,813 | |||
Total Accumulated Deficit | $ | (3,735,957 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
increase accumulated undistributed net investment income by $35,498, decrease accumulated net realized loss on investments by $81, and decrease paid-in-capital by $35,417. | |||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 615,897 | ||
2017 | 3,466,873 | |||
Total | $ | 4,082,770 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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 |
18
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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.21 | % | 1.11 | % | 1.11 | % | 1.17 | % | 1.22 | % | ||||||||||
Class B Shares | 2.01 | 1.92 | 1.91 | 1.96 | 1.99 | |||||||||||||||
Class C Shares | 1.92 | 1.84 | 1.83 | 1.88 | 1.91 | |||||||||||||||
Class I Shares | 0.88 | 0.81 | 0.78 | 0.88 | * | |||||||||||||||
Class R3 Shares | 1.45 | 1.46 | 1.47 | † | ||||||||||||||||
Class R4 Shares | 1.11 | 1.12 | 1.13 | † | ||||||||||||||||
Class R5 Shares | 0.80 | 0.82 | 0.84 | † | ||||||||||||||||
Class Y Shares | 0.71 | 0.72 | 0.71 | 0.73 | 0.75 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006. | |
† | 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $22,841 and contingent deferred sales charges of $2,563 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $463. These commissions are in turn paid to sales representatives of the broker/dealers. |
19
Notes to Financial Statements — (continued)
October 31, 2009
(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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was in the amount of $36. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $30,982 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. 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 | Total Return | |||||||
Affiliate for SEC | Excluding Payment | |||||||
Settlement for the | from Affiliate for the | |||||||
Year Ended | Year Ended October | |||||||
October 31, 2007 | 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 |
5. | Affiliate Holdings: | |
As of October 31, 2009, The Hartford Checks and Balances Fund, an affiliated fund, had ownership of 16,625 Class Y shares of the Fund. | ||
6. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 11,669,790 | ||
Sales Proceeds Excluding U.S. Government Obligations | 10,488,325 |
20
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 126,979 | 4,767 | (179,765 | ) | — | (48,019 | ) | 146,914 | 23,779 | (97,067 | ) | — | 73,626 | |||||||||||||||||||||||||||
Amount | $ | 2,908,863 | $ | 98,818 | $ | (4,197,839 | ) | $ | — | $ | (1,190,158 | ) | $ | 5,204,130 | $ | 960,180 | $ | (3,206,287 | ) | $ | — | $ | 2,958,023 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 4,643 | 120 | (14,825 | ) | — | (10,062 | ) | 6,666 | 5,081 | (13,630 | ) | — | (1,883 | ) | ||||||||||||||||||||||||||
Amount | $ | 95,652 | $ | 2,237 | $ | (302,796 | ) | $ | — | $ | (204,907 | ) | $ | 214,918 | $ | 183,341 | $ | (423,963 | ) | $ | — | $ | (25,704 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 21,432 | 533 | (32,191 | ) | — | (10,226 | ) | 35,585 | 8,838 | (23,786 | ) | — | 20,637 | |||||||||||||||||||||||||||
Amount | $ | 455,896 | $ | 9,961 | $ | (639,406 | ) | $ | — | $ | (173,549 | ) | $ | 1,162,684 | $ | 320,715 | $ | (707,999 | ) | $ | — | $ | 775,400 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 92,259 | 381 | (17,705 | ) | — | 74,935 | 18,052 | 287 | (3,018 | ) | — | 15,321 | ||||||||||||||||||||||||||||
Amount | $ | 2,401,632 | $ | 7,848 | $ | (450,248 | ) | $ | — | $ | 1,959,232 | $ | 583,424 | $ | 11,558 | $ | (93,550 | ) | $ | — | $ | 501,432 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 929 | 5 | (215 | ) | — | 719 | 347 | — | (35 | ) | — | 312 | ||||||||||||||||||||||||||||
Amount | $ | 23,823 | $ | 112 | $ | (5,473 | ) | $ | — | $ | 18,462 | $ | 12,781 | $ | 3 | $ | (1,192 | ) | $ | — | $ | 11,592 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 4,047 | 63 | (766 | ) | — | 3,344 | 2,754 | 34 | (110 | ) | — | 2,678 | ||||||||||||||||||||||||||||
Amount | $ | 104,309 | $ | 1,388 | $ | (19,415 | ) | $ | — | $ | 86,282 | $ | 101,244 | $ | 1,432 | $ | (3,666 | ) | $ | — | $ | 99,010 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 4,899 | 31 | (589 | ) | — | 4,341 | 1,479 | 8 | (93 | ) | — | 1,394 | ||||||||||||||||||||||||||||
Amount | $ | 130,863 | $ | 688 | $ | (16,545 | ) | $ | — | $ | 115,006 | $ | 57,451 | $ | 352 | $ | (3,325 | ) | $ | — | $ | 54,478 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 11,636 | 857 | (6,234 | ) | — | 6,259 | 22,380 | 1,725 | (2,635 | ) | — | 21,470 | ||||||||||||||||||||||||||||
Amount | $ | 290,454 | $ | 19,106 | $ | (153,866 | ) | $ | — | $ | 155,694 | $ | 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) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 3,504 | $ | 83,420 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. | ||
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
21
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 23.43 | $ | 0.14 | $ | — | $ | 4.76 | $ | 4.90 | $ | (0.31 | ) | $ | — | $ | — | $ | (0.31 | ) | $ | 4.59 | $ | 28.02 | ||||||||||||||||||||
B | 20.77 | (0.05 | ) | — | 4.28 | 4.23 | (0.05 | ) | — | — | (0.05 | ) | 4.18 | 24.95 | ||||||||||||||||||||||||||||||
C | 20.91 | (0.03 | ) | — | 4.29 | 4.26 | (0.10 | ) | — | — | (0.10 | ) | 4.16 | 25.07 | ||||||||||||||||||||||||||||||
I | 23.41 | 0.14 | — | 4.82 | 4.96 | (0.43 | ) | — | — | (0.43 | ) | 4.53 | 27.94 | |||||||||||||||||||||||||||||||
R3 | 24.92 | 0.05 | — | 5.07 | 5.12 | (0.37 | ) | — | — | (0.37 | ) | 4.75 | 29.67 | |||||||||||||||||||||||||||||||
R4 | 25.08 | 0.15 | — | 5.12 | 5.27 | (0.39 | ) | — | — | (0.39 | ) | 4.88 | 29.96 | |||||||||||||||||||||||||||||||
R5 | 25.21 | 0.20 | — | 5.17 | 5.37 | (0.43 | ) | — | — | (0.43 | ) | 4.94 | 30.15 | |||||||||||||||||||||||||||||||
Y | 25.28 | 0.27 | — | 5.14 | 5.41 | (0.45 | ) | — | — | (0.45 | ) | 4.96 | 30.24 | |||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
B | 41.59 | (0.09 | ) | — | (17.00 | ) | (17.09 | ) | — | (3.73 | ) | — | (3.73 | ) | (20.82 | ) | 20.77 | |||||||||||||||||||||||||||
C | 41.82 | (0.06 | ) | — | (17.12 | ) | (17.18 | ) | — | (3.73 | ) | — | (3.73 | ) | (20.91 | ) | 20.91 | |||||||||||||||||||||||||||
I | 45.90 | 0.28 | — | (19.04 | ) | (18.76 | ) | — | (3.73 | ) | — | (3.73 | ) | (22.49 | ) | 23.41 | ||||||||||||||||||||||||||||
R3 | 48.91 | 0.09 | — | (20.35 | ) | (20.26 | ) | — | (3.73 | ) | — | (3.73 | ) | (23.99 | ) | 24.92 | ||||||||||||||||||||||||||||
R4 | 49.05 | 0.22 | — | (20.46 | ) | (20.24 | ) | — | (3.73 | ) | — | (3.73 | ) | (23.97 | ) | 25.08 | ||||||||||||||||||||||||||||
R5 | 49.15 | 0.34 | — | (20.55 | ) | (20.21 | ) | — | (3.73 | ) | — | (3.73 | ) | (23.94 | ) | 25.21 | ||||||||||||||||||||||||||||
Y | 49.23 | 0.36 | — | (20.58 | ) | (20.22 | ) | — | (3.73 | ) | — | (3.73 | ) | (23.95 | ) | 25.28 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 36.25 | (0.15 | ) | — | 8.53 | 8.38 | — | (3.04 | ) | — | (3.04 | ) | 5.34 | 41.59 | ||||||||||||||||||||||||||||||
C | 36.40 | (0.12 | ) | — | 8.58 | 8.46 | — | (3.04 | ) | — | (3.04 | ) | 5.42 | 41.82 | ||||||||||||||||||||||||||||||
I | 39.69 | 0.26 | — | 9.39 | 9.65 | (0.40 | ) | (3.04 | ) | — | (3.44 | ) | 6.21 | 45.90 | ||||||||||||||||||||||||||||||
R3(g) | 40.22 | 0.01 | — | 8.68 | 8.69 | — | — | — | — | 8.69 | 48.91 | |||||||||||||||||||||||||||||||||
R4(g) | 40.22 | 0.02 | — | 8.81 | 8.83 | — | — | — | — | 8.83 | 49.05 | |||||||||||||||||||||||||||||||||
R5(g) | 40.22 | 0.08 | — | 8.85 | 8.93 | — | — | — | — | 8.93 | 49.15 | |||||||||||||||||||||||||||||||||
Y | 42.19 | 0.34 | — | 10.06 | 10.40 | (0.32 | ) | (3.04 | ) | — | (3.36 | ) | 7.04 | 49.23 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 36.51 | 0.15 | — | 6.43 | 6.58 | — | (3.42 | ) | — | (3.42 | ) | 3.16 | 39.67 | |||||||||||||||||||||||||||||||
B | 33.90 | (0.10 | ) | — | 5.87 | 5.77 | — | (3.42 | ) | — | (3.42 | ) | 2.35 | 36.25 | ||||||||||||||||||||||||||||||
C | 34.00 | (0.07 | ) | — | 5.89 | 5.82 | — | (3.42 | ) | — | (3.42 | ) | 2.40 | 36.40 | ||||||||||||||||||||||||||||||
I(j) | 37.53 | — | — | 2.16 | 2.16 | — | — | — | — | 2.16 | 39.69 | |||||||||||||||||||||||||||||||||
Y | 38.47 | 0.30 | — | 6.84 | 7.14 | — | (3.42 | ) | — | (3.42 | ) | 3.72 | 42.19 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | �� | |||||||||||||||||||||||||||||||||||||||||||
A | 30.80 | 0.09 | — | 5.62 | 5.71 | — | — | — | — | 5.71 | 36.51 | |||||||||||||||||||||||||||||||||
B | 28.82 | (0.15 | ) | — | 5.23 | 5.08 | — | — | — | — | 5.08 | 33.90 | ||||||||||||||||||||||||||||||||
C | 28.88 | (0.11 | ) | — | 5.23 | 5.12 | — | — | — | — | 5.12 | 34.00 | ||||||||||||||||||||||||||||||||
Y | 32.29 | 0.21 | — | 5.97 | 6.18 | — | — | — | — | 6.18 | 38.47 |
(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) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Not annualized. | |
(i) | Annualized. | |
(j) | Commenced operations on August 31, 2006. |
22
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||
21.40 | % | $ | 9,038,634 | 1.22 | % | 1.22 | % | 1.22 | % | 0.58 | % | 77 | % | |||||||||||||
20.44 | 1,027,505 | 2.07 | 2.02 | 2.02 | (0.22 | ) | — | |||||||||||||||||||
20.54 | 2,905,481 | 1.93 | 1.93 | 1.93 | (0.15 | ) | — | |||||||||||||||||||
21.84 | 2,616,775 | 0.89 | 0.89 | 0.89 | 0.59 | — | ||||||||||||||||||||
21.08 | 30,633 | 1.46 | 1.46 | 1.46 | 0.19 | — | ||||||||||||||||||||
21.53 | 189,912 | 1.12 | 1.12 | 1.12 | 0.60 | — | ||||||||||||||||||||
21.89 | 173,619 | 0.81 | 0.81 | 0.81 | 0.75 | — | ||||||||||||||||||||
22.01 | 1,474,927 | 0.72 | 0.72 | 0.72 | 1.05 | — | ||||||||||||||||||||
(44.46 | ) | 8,682,603 | 1.12 | 1.12 | 1.12 | 0.54 | 82 | |||||||||||||||||||
(44.90 | ) | 1,064,188 | 1.92 | 1.92 | 1.92 | (0.29 | ) | — | ||||||||||||||||||
(44.86 | ) | 2,637,037 | 1.84 | 1.84 | 1.84 | (0.19 | ) | — | ||||||||||||||||||
(44.27 | ) | 438,528 | 0.81 | 0.81 | 0.81 | 0.87 | — | |||||||||||||||||||
(44.64 | ) | 7,809 | 1.46 | 1.46 | 1.46 | 0.28 | — | |||||||||||||||||||
(44.46 | ) | 75,127 | 1.12 | 1.12 | 1.12 | 0.60 | — | |||||||||||||||||||
(44.30 | ) | 35,734 | 0.83 | 0.83 | 0.83 | 0.93 | — | |||||||||||||||||||
(44.24 | ) | 1,074,711 | 0.72 | 0.72 | 0.72 | 0.95 | — | |||||||||||||||||||
26.15 | (f) | 13,684,583 | 1.11 | 1.11 | 1.11 | 0.39 | 72 | |||||||||||||||||||
25.15 | (f) | 2,209,870 | 1.92 | 1.92 | 1.92 | (0.40 | ) | — | ||||||||||||||||||
25.28 | (f) | 4,411,286 | 1.83 | 1.83 | 1.83 | (0.32 | ) | — | ||||||||||||||||||
26.49 | (f) | 156,616 | 0.79 | 0.79 | 0.79 | 0.65 | — | |||||||||||||||||||
21.61 | (h) | 41 | 1.47 | (i) | 1.47 | (i) | 1.47 | (i) | 0.04 | (i) | — | |||||||||||||||
21.95 | (h) | 15,618 | 1.14 | (i) | 1.14 | (i) | 1.14 | (i) | 0.06 | (i) | — | |||||||||||||||
22.20 | (h) | 1,165 | 0.85 | (i) | 0.85 | (i) | 0.85 | (i) | 0.25 | (i) | — | |||||||||||||||
26.66 | (f) | 1,035,754 | 0.72 | 0.72 | 0.72 | 0.78 | — | |||||||||||||||||||
19.56 | 9,312,766 | 1.18 | 1.18 | 1.18 | 0.47 | 74 | ||||||||||||||||||||
18.59 | 1,868,359 | 1.97 | 1.97 | 1.97 | (0.31 | ) | — | |||||||||||||||||||
18.69 | 2,968,472 | 1.90 | 1.90 | 1.90 | (0.25 | ) | — | |||||||||||||||||||
5.76 | (h) | 5,193 | 0.88 | (i) | 0.88 | (i) | 0.88 | (i) | 0.17 | (i) | — | |||||||||||||||
20.07 | 414,259 | 0.75 | 0.75 | 0.75 | 0.90 | — | ||||||||||||||||||||
18.54 | 6,071,891 | 1.26 | 1.26 | 1.26 | 0.31 | 93 | ||||||||||||||||||||
17.63 | 1,631,199 | 2.03 | 2.03 | 2.03 | (0.45 | ) | — | |||||||||||||||||||
17.73 | 1,834,562 | 1.94 | 1.94 | 1.94 | (0.37 | ) | — | |||||||||||||||||||
19.14 | 245,163 | 0.78 | 0.78 | 0.78 | 0.76 | — |
23
December 15, 2009
24
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
25
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 — 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009. |
26
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
27
DRD* | 100.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short- | Long- | |||||||||||||||||||
Tax | Term | Term | ||||||||||||||||||
Return of | Capital | Capital | ||||||||||||||||||
Income | Capital | Gain | Gain | Total | ||||||||||||||||
Class A | 0.312 | 0.001 | N/A | N/A | 0.313 | |||||||||||||||
Class B | 0.048 | 0.001 | N/A | N/A | 0.049 | |||||||||||||||
Class C | 0.101 | 0.001 | N/A | N/A | 0.102 | |||||||||||||||
Class I | 0.428 | 0.001 | N/A | N/A | 0.429 | |||||||||||||||
Class R3 | 0.372 | 0.001 | N/A | N/A | 0.373 | |||||||||||||||
Class R4 | 0.384 | 0.001 | N/A | N/A | 0.385 | |||||||||||||||
Class R5 | 0.426 | 0.001 | N/A | N/A | 0.427 | |||||||||||||||
Class Y | 0.445 | 0.001 | N/A | N/A | 0.446 |
28
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,220.40 | $ | 6.60 | $ | 1,000.00 | $ | 1,019.26 | $ | 6.01 | 1 .18 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,215.90 | $ | 11.17 | $ | 1,000.00 | $ | 1,015.12 | $ | 10.16 | 2 .00 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,216.40 | $ | 10.50 | $ | 1,000.00 | $ | 1,015.73 | $ | 9.55 | 1 .88 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,222.80 | $ | 4.93 | $ | 1,000.00 | $ | 1,020.77 | $ | 4.48 | 0 .88 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,219.00 | $ | 8.05 | $ | 1,000.00 | $ | 1,017.95 | $ | 7.32 | 1 .44 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,221.40 | $ | 6.16 | $ | 1,000.00 | $ | 1,019.66 | $ | 5.60 | 1 .10 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,223.10 | $ | 4.48 | $ | 1,000.00 | $ | 1,021.17 | $ | 4.08 | 0 .80 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,223.30 | $ | 3.92 | $ | 1,000.00 | $ | 1,021.68 | $ | 3.57 | 0 .70 | 184 | 365 |
29
30
31
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
32
33
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
9 | ||||
10 | ||||
11 | ||||
12 | ||||
13 | ||||
24 | ||||
26 | ||||
27 | ||||
29 | ||||
29 | ||||
30 | ||||
31 | ||||
32 |
(subadvised by Wellington Management Company, LLP) | Investment objective — Seeks growth of capital. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
Capital Appreciation II A# | 23.02 | % | 4.17 | % | ||||
Capital Appreciation II A## | 16.26 | % | 2.87 | % | ||||
Capital Appreciation II B# | 22.20 | % | 3.36 | % | ||||
Capital Appreciation II B## | 17.20 | % | 2.97 | % | ||||
Capital Appreciation II C# | 22.09 | % | 3.45 | % | ||||
Capital Appreciation II C## | 21.09 | % | 3.45 | % | ||||
Capital Appreciation II I# | 23.41 | % | 4.42 | % | ||||
Capital Appreciation II R3# | 22.68 | % | 4.10 | % | ||||
Capital Appreciation II R4# | 23.09 | % | 4.33 | % | ||||
Capital Appreciation II R5# | 23.42 | % | 4.51 | % | ||||
Capital Appreciation II Y# | 23.70 | % | 4.62 | % | ||||
Russell 3000 Index | 10.83 | % | -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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
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
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 2.3 | % | ||
Banks (Financials) | 2.7 | |||
Capital Goods (Industrials) | 5.1 | |||
Commercial & Professional Services (Industrials) | 0.1 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 5.2 | |||
Consumer Services (Consumer Discretionary) | 2.8 | |||
Diversified Financials (Financials) | 7.0 | |||
Energy (Energy) | 8.3 | |||
Food & Staples Retailing (Consumer Staples) | 1.1 | |||
Food, Beverage & Tobacco (Consumer Staples) | 2.1 | |||
Health Care Equipment & Services (Health Care) | 4.7 | |||
Household & Personal Products (Consumer Staples) | 1.0 | |||
Insurance (Financials) | 5.7 | |||
Materials (Materials) | 7.7 | |||
Media (Consumer Discretionary) | 1.5 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 7.2 | |||
Real Estate (Financials) | 1.0 | |||
Retailing (Consumer Discretionary) | 7.5 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 2.3 | |||
Software & Services (Information Technology) | 9.8 | |||
Technology Hardware & Equipment (Information Technology) | 8.9 | |||
Telecommunication Services (Services) | 0.4 | |||
Transportation (Industrials) | 3.9 | |||
Utilities (Utilities) | 1.1 | |||
Short-Term Investments | 1.6 | |||
Other Assets and Liabilities | (1.0 | ) | ||
Total | 100.0 | % | ||
3
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 99.4% | ||||||||
Automobiles & Components — 2.3% | ||||||||
92 | ArvinMeritor, Inc. | $ | 720 | |||||
127 | Astra International TBK | 408 | ||||||
58 | Daimler AG | 2,810 | ||||||
486 | Dongfeng Motor Group Co., Ltd. | 577 | ||||||
1,808 | Ford Motor Co. • | 12,657 | ||||||
1,479 | Geely Automobile Holdings Ltd. | 535 | ||||||
23 | Harley-Davidson, Inc. | 571 | ||||||
29 | Mahindra & Mahindra Ltd. | 560 | ||||||
265 | Modine Manufacturing Co. | 2,729 | ||||||
111 | TRW Automotive Holdings Corp. • | 1,731 | ||||||
23,298 | ||||||||
Banks — 2.7% | ||||||||
265 | Banco Santander Central Hispano S.A. | 4,262 | ||||||
914 | Bank Mandiri TBK | 439 | ||||||
7 | HDFC Bank Ltd. ADR | 719 | ||||||
190 | HSBC Holding plc | 2,102 | ||||||
102 | Huntington Bancshares, Inc. | 389 | ||||||
79 | Itau Unibanco Banco Multiplo S.A. ADR | 1,505 | ||||||
1,143 | Lloyds Banking Group plc | 1,612 | ||||||
40 | PNC Financial Services Group, Inc. | 1,972 | ||||||
378 | Popular, Inc. | 816 | ||||||
76 | Sumitomo Mitsui Financial Group, Inc. | 2,587 | ||||||
26 | SunTrust Banks, Inc. | 505 | ||||||
414 | Wells Fargo & Co. | 11,390 | ||||||
28,298 | ||||||||
Capital Goods — 5.1% | ||||||||
72 | AMETEK, Inc. | 2,495 | ||||||
34 | BE Aerospace, Inc. • | 610 | ||||||
94 | Beijing Enterprises Holdings, Ltd. | 560 | ||||||
66 | Boeing Co. | 3,160 | ||||||
650 | China Railway Group Ltd. • | 512 | ||||||
81 | Deere & Co. | 3,698 | ||||||
79 | Dover Corp. | 2,992 | ||||||
6 | First Solar, Inc. • | 736 | ||||||
18 | Fluor Corp. | 783 | ||||||
— | Foster Wheeler AG • | — | ||||||
54 | General Dynamics Corp. | 3,370 | ||||||
190 | General Electric Co. | 2,703 | ||||||
28 | Hansen Transmissions • | 60 | ||||||
79 | Honeywell International, Inc. | 2,821 | ||||||
26 | Illinois Tool Works, Inc. | 1,181 | ||||||
311 | Ingersoll-Rand plc | 9,824 | ||||||
32 | Lockheed Martin Corp. | 2,229 | ||||||
36 | Manitowoc Co., Inc. | 332 | ||||||
12 | Navistar International Corp. • | 394 | ||||||
18 | Owens Corning, Inc. • | 389 | ||||||
69 | Pentair, Inc. | 2,008 | ||||||
32 | Precision Castparts Corp. | 3,019 | ||||||
43 | Regal-Beloit Corp. | 2,002 | ||||||
9 | Schneider Electric S.A. | 936 | ||||||
40 | Siemens AG ADR | 3,583 | ||||||
18 | Stanley Works | 791 | ||||||
28 | Sunpower Corp. Class B • | 608 | ||||||
30 | Terex Corp. • | 606 | ||||||
9 | Textron, Inc. | 167 | ||||||
10 | Vestas Wind Systems A/S • | 715 | ||||||
53,284 | ||||||||
Commercial & Professional Services — 0.1% | ||||||||
39 | Monster Worldwide, Inc. • | 566 | ||||||
Consumer Durables & Apparel — 5.2% | ||||||||
1,208 | 361 Degrees International Ltd. | 636 | ||||||
411 | Anta Sports Products Ltd. | 495 | ||||||
5,130 | China Hongxing Sports Ltd. | 715 | ||||||
64 | CIE Financiere Richemont S.A. | 1,800 | ||||||
39 | Coach, Inc. | 1,296 | ||||||
524 | Hanesbrands, Inc. • | 11,331 | ||||||
485 | Jarden Corp. | 13,291 | ||||||
36 | Lennar Corp. | 447 | ||||||
12 | MRV Engenharia e Participacoes S.A. | 226 | ||||||
68 | Nikon Corp. | 1,262 | ||||||
5 | NVR, Inc. • | 3,311 | ||||||
86 | PDG Realty S.A. | 718 | ||||||
238 | Pool Corp. | 4,664 | ||||||
354 | Pulte Homes, Inc. | 3,191 | ||||||
95 | Toll Brothers, Inc. • | 1,647 | ||||||
196 | Warnaco Group, Inc. • | 7,940 | ||||||
1,463 | Xtep International Holdings Ltd. | 697 | ||||||
53,667 | ||||||||
Consumer Services — 2.8% | ||||||||
119 | Apollo Group, Inc. Class A • | 6,801 | ||||||
12 | Bally Technologies, Inc. • | 453 | ||||||
472 | Corinthian Colleges, Inc. • | 7,489 | ||||||
28 | Ctrip.com International Ltd. ADR • | 1,501 | ||||||
56 | Educomp Solutions Ltd. | 941 | ||||||
38 | International Game Technology | 676 | ||||||
66 | MGM Mirage, Inc. • | 614 | ||||||
45,066 | Rexlot Holdings Ltd. | 3,964 | ||||||
2,027 | Shangri-La Asia Ltd. | 3,898 | ||||||
546 | Thomas Cook Group plc | 1,828 | ||||||
8 | WMS Industries, Inc. • | 300 | ||||||
28,465 | ||||||||
Diversified Financials — 7.0% | ||||||||
191 | Ameriprise Financial, Inc. | 6,618 | ||||||
725 | Bank of America Corp. | 10,576 | ||||||
225 | China Everbright Ltd. | 530 | ||||||
9 | Franklin Resources, Inc. | 921 | ||||||
98 | Goldman Sachs Group, Inc. | 16,641 | ||||||
1,079 | Great American Group, Inc. • | 4,587 | ||||||
25 | Hong Kong Exchanges & Clearing Ltd. | 440 | ||||||
95 | ING Groep N.V. | 1,234 | ||||||
69 | Invesco Ltd. | 1,464 | ||||||
36 | JP Morgan Chase & Co. | 1,512 | ||||||
33 | Julius Baer Group Ltd. | 1,228 | ||||||
22 | Moody’s Corp. | 526 | ||||||
178 | Nomura Holdings, Inc. | 1,255 | ||||||
160 | Oaktree Capital ■• | 5,280 | ||||||
260 | PennantPark Investment Corp. | 2,007 | ||||||
170 | TD Ameritrade Holding Corp. • | 3,273 | ||||||
781 | UBS AG | 13,031 | ||||||
50 | UBS AG ADR | 837 | ||||||
71,960 | ||||||||
Energy — 8.3% | ||||||||
52 | Anadarko Petroleum Corp. | 3,196 | ||||||
19 | Apache Corp. | 1,826 | ||||||
134 | Baker Hughes, Inc. | 5,649 | ||||||
288 | BG Group plc | 4,965 | ||||||
4,173 | Bumi Resources TBK PT | 1,005 | ||||||
119 | Cameco Corp. | 3,234 | ||||||
68 | Canadian Natural Resources Ltd. ADR | 4,404 | ||||||
59 | Complete Production Services, Inc. • | 564 |
4
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 99.4% — (continued) | ||||||||
Energy — 8.3% — (continued) | ||||||||
138 | Consol Energy, Inc. | $ | 5,887 | |||||
87 | Exxon Mobil Corp. | 6,269 | ||||||
83 | Halliburton Co. | 2,438 | ||||||
47 | Hess Corp. | 2,578 | ||||||
458 | Karoon Gas Australia Ltd. • | 3,104 | ||||||
20 | Lundin Petroleum Ab • | 173 | ||||||
16 | National Oilwell Varco, Inc. • | 666 | ||||||
126 | Newfield Exploration Co. • | 5,185 | ||||||
70 | Noble Energy, Inc. | 4,614 | ||||||
36 | OAO Gazprom Class S ADR | 863 | ||||||
8 | Occidental Petroleum Corp. | 627 | ||||||
39 | Overseas Shipholding Group, Inc. | 1,527 | ||||||
144 | Paladin Energy Ltd. • | 522 | ||||||
55 | Peabody Energy Corp. | 2,166 | ||||||
18 | PetroChina Co., Ltd. ADR | 2,161 | ||||||
28 | Petroleo Brasileiro S.A. ADR | 1,276 | ||||||
96 | SBM Offshore N.V. | 1,837 | ||||||
— | Schlumberger Ltd. | 6 | ||||||
147 | Suncor Energy, Inc. | 4,867 | ||||||
120 | Total S.A. ADR | 7,233 | ||||||
127 | Tsakos Energy Navigation Ltd. | 1,974 | ||||||
70 | Valero Energy Corp. | 1,267 | ||||||
101 | Weatherford International Ltd. • | 1,774 | ||||||
39 | XTO Energy, Inc. | 1,635 | ||||||
85,492 | ||||||||
Food & Staples Retailing — 1.1% | ||||||||
145 | Kroger Co. | 3,359 | ||||||
1,256 | Olam International Ltd. | 2,412 | ||||||
108 | Sysco Corp. | 2,859 | ||||||
61 | Wal-Mart Stores, Inc. | 3,047 | ||||||
11,677 | ||||||||
Food, Beverage & Tobacco — 2.1% | ||||||||
31 | BRF Brasil Foods S.A. ADR • | 1,495 | ||||||
2,421 | Chaoda Modern Agriculture | 1,871 | ||||||
57 | Cott Corp. • | 447 | ||||||
24 | Dr. Pepper Snapple Group • | 666 | ||||||
11 | Green Mountain Coffee Roasters • | 706 | ||||||
39 | Groupe Danone | 2,349 | ||||||
110 | Imperial Tobacco Group plc | 3,245 | ||||||
1 | Japan Tobacco, Inc. | 3,004 | ||||||
45 | Kirin Brewery Co., Ltd. | 740 | ||||||
1,354 | Marine Harvest • | 982 | ||||||
28 | Nestle S.A. | 1,286 | ||||||
49 | PepsiCo, Inc. | 2,943 | ||||||
41 | Unilever N.V. NY Shares ADR | 1,279 | ||||||
21,013 | ||||||||
Health Care Equipment & Services — 4.7% | ||||||||
10 | Baxter International, Inc. | 546 | ||||||
9 | Beckman Coulter, Inc. | 566 | ||||||
232 | Cardinal Health, Inc. | 6,569 | ||||||
9 | China Medical Technologies, Inc. ADR | 145 | ||||||
43 | CIGNA Corp. | 1,205 | ||||||
191 | Covidien plc | 8,051 | ||||||
8 | Edwards Lifesciences Corp. • | 608 | ||||||
32 | Hologic, Inc. • | 480 | ||||||
4 | Intuitive Surgical, Inc. • | 963 | ||||||
94 | McKesson Corp. | 5,538 | ||||||
151 | Medtronic, Inc. | 5,403 | ||||||
86 | Orthovita, Inc. • | 302 | ||||||
22 | Psychiatric Solutions, Inc. • | 452 | ||||||
122 | Shandong Weigao Group Medical Polymer Co., Ltd. | 429 | ||||||
10 | St. Jude Medical, Inc. • | 331 | ||||||
163 | SXC Health Solutions Corp. • | 7,466 | ||||||
382 | UnitedHealth Group, Inc. | 9,901 | ||||||
48,955 | ||||||||
Household & Personal Products — 1.0% | ||||||||
10 | Energizer Holdings, Inc. • | 581 | ||||||
103 | Hengan International Group Co., Ltd. | 662 | ||||||
206 | Herbalife Ltd. | 6,916 | ||||||
46 | Procter & Gamble Co. | 2,643 | ||||||
10,802 | ||||||||
Insurance — 5.7% | ||||||||
323 | ACE Ltd. | 16,602 | ||||||
574 | China Life Insurance Co., Ltd. | 2,640 | ||||||
51 | Chubb Corp. | 2,480 | ||||||
54 | Everest Re Group Ltd. | 4,704 | ||||||
234 | Fidelity National Financial, Inc. | 3,169 | ||||||
51 | First American Financial Corp. | 1,541 | ||||||
384 | Fortis | 1,660 | ||||||
68 | Genworth Financial, Inc. | 720 | ||||||
371 | Marsh & McLennan Cos., Inc. | 8,710 | ||||||
18 | PartnerRe Ltd. | 1,407 | ||||||
86 | Platinum Underwriters Holdings Ltd. | 3,080 | ||||||
63 | Principal Financial Group, Inc. | 1,588 | ||||||
104 | Reinsurance Group of America, Inc. | 4,776 | ||||||
203 | Unum Group | 4,050 | ||||||
4 | White Mountains Insurance Group Ltd. | 1,238 | ||||||
58,365 | ||||||||
Materials — 7.7% | ||||||||
45 | AngloGold Ltd. ADR | 1,696 | ||||||
13 | Aracruz Celulose S.A. ADR • | 234 | ||||||
59 | Barrick Gold Corp. | 2,110 | ||||||
11 | BHP Billiton Ltd. ADR | 740 | ||||||
15 | Cliff’s Natural Resources, Inc. | 546 | ||||||
24 | Compania De Minas Buenaventur ADR | 812 | ||||||
117 | CRH plc | 2,871 | ||||||
59 | Eldorado Gold Corp. • | 656 | ||||||
17 | Freeport-McMoRan Copper & Gold, Inc. | 1,249 | ||||||
70 | Gerdau S.A. | 1,051 | ||||||
19 | Goldcorp, Inc. | 699 | ||||||
31 | HeidelbergCement AG | 1,883 | ||||||
301 | Huabao International Holdings Ltd. | 287 | ||||||
53 | IAMGOLD Corp. | 701 | ||||||
89 | Impala Platinum Holdings Ltd. | 1,954 | ||||||
42 | Jindal Steel & Power | 565 | ||||||
110 | Mosaic Co. | 5,156 | ||||||
124 | Newmont Mining Corp. | 5,405 | ||||||
63 | Osisko Mining Corp. • | 426 | ||||||
106 | Owens-Illinois, Inc. • | 3,389 | ||||||
24 | Pan American Silver Corp. | 492 | ||||||
104 | Potash Corp. of Saskatchewan, Inc. | 9,614 | ||||||
24 | Potash Corp. of Saskatchewan, Inc. ADR | 2,257 | ||||||
16 | Randgold Resources Ltd. ADR | 1,071 | ||||||
1,864 | Rexam plc | 8,441 | ||||||
59 | Rio Tinto plc | 2,602 | ||||||
15 | Scotts Miracle-Gro Co. Class A | 623 | ||||||
27 | Sino Forest Corp. • | 381 | ||||||
184 | Sterlite Industries Ltd. | 2,897 | ||||||
222 | Teck Cominco Ltd. Class B | 6,408 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 99.4% — (continued) | ||||||||
Materials — 7.7% — (continued) | ||||||||
32 | Vale S.A. — SP ADR | $ | 811 | |||||
35 | Vedanta Resources plc | 1,203 | ||||||
59 | Vulcan Materials Co. | 2,693 | ||||||
14 | Walter Energy, Inc. | 828 | ||||||
407 | Xstrata plc | 5,867 | ||||||
49 | Yamana Gold, Inc. | 522 | ||||||
79,140 | ||||||||
Media — 1.5% | ||||||||
292 | Comcast Corp. Class A | 4,230 | ||||||
252 | Comcast Corp. Special Class A | 3,528 | ||||||
14 | DreamWorks Animation SKG, Inc. • | 441 | ||||||
87 | Focus Media Holding Ltd. ADR • | 1,042 | ||||||
119 | Virgin Media, Inc. | 1,655 | ||||||
100 | Walt Disney Co. | 2,737 | ||||||
247 | WPP plc | 2,215 | ||||||
15,848 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 7.2% | ||||||||
143 | Alkermes, Inc. • | 1,138 | ||||||
33 | Amgen, Inc. • | 1,757 | ||||||
14 | Amylin Pharmaceuticals, Inc. • | 156 | ||||||
29 | Auxilium Pharmaceuticals, Inc. • | 910 | ||||||
44 | Bristol-Myers Squibb Co. | 964 | ||||||
104 | Daiichi Sankyo Co., Ltd. | 2,024 | ||||||
278 | Elan Corp. plc ADR • | 1,516 | ||||||
66 | Eli Lilly & Co. | 2,242 | ||||||
63 | Genzyme Corp. • | 3,184 | ||||||
22 | Gilead Sciences, Inc. • | 923 | ||||||
283 | Impax Laboratories, Inc. • | 2,510 | ||||||
54 | Johnson & Johnson | 3,212 | ||||||
320 | King Pharmaceuticals, Inc. • | 3,244 | ||||||
318 | Merck & Co., Inc. | 9,827 | ||||||
407 | Novavax, Inc. • | 1,564 | ||||||
1,050 | Pfizer, Inc. | 17,886 | ||||||
47 | Roche Holding AG | 7,551 | ||||||
217 | Teva Pharmaceutical Industries Ltd. ADR | 10,978 | ||||||
13 | Thermo Fisher Scientific, Inc. • | 576 | ||||||
17 | UCB S.A. | 735 | ||||||
72,897 | ||||||||
Real Estate — 1.0% | ||||||||
91 | BR Malls Participacoes S.A. • | 971 | ||||||
281 | Chimera Investment Corp. | 981 | ||||||
350 | China Overseas Land & Investment Ltd. | 754 | ||||||
337 | China Resources Land Ltd. | 813 | ||||||
422 | Hang Lung Properties Ltd. | 1,595 | ||||||
98 | Iguatemi Emp de Shopping | 1,446 | ||||||
217 | Sun Hung Kai Properties Ltd. | 3,282 | ||||||
9,842 | ||||||||
Retailing — 7.5% | ||||||||
202 | Advance Automotive Parts, Inc. | 7,533 | ||||||
134 | Aeropostale, Inc. • | 5,014 | ||||||
68 | Amazon.com, Inc. • | 8,128 | ||||||
21 | AnnTaylor Stores Corp. • | 274 | ||||||
687 | Belle International Holdings Ltd. | 694 | ||||||
286 | Best Buy Co., Inc. | 10,907 | ||||||
1,405 | Buck Holdings L.P. ⌂•† | 1,760 | ||||||
225 | China Resources Enterprise | 754 | ||||||
27 | Dick’s Sporting Goods, Inc. • | 608 | ||||||
432 | Gap, Inc. | 9,223 | ||||||
264 | Golden Eagle Retail Group Ltd. | 454 | ||||||
124 | Home Depot, Inc. | 3,114 | ||||||
126 | Kohl’s Corp. • | 7,232 | ||||||
635 | Staples, Inc. | 13,781 | ||||||
252 | Urban Outfitters, Inc. • | 7,906 | ||||||
8 | Williams-Sonoma, Inc. | 146 | ||||||
77,528 | ||||||||
Semiconductors & Semiconductor Equipment — 2.3% | ||||||||
22 | Analog Devices, Inc. | 556 | ||||||
25 | ASML Holding N.V. ADR | 683 | ||||||
25 | Atheros Communications, Inc. • | 618 | ||||||
— | Broadcom Corp. Class A • | 5 | ||||||
77 | Lam Research Corp. • | 2,611 | ||||||
54 | Marvell Technology Group Ltd. • | 745 | ||||||
45 | Maxim Integrated Products, Inc. | 744 | ||||||
38 | NVIDIA Corp. • | 458 | ||||||
50 | Skyworks Solutions, Inc. • | 516 | ||||||
532 | Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 5,071 | ||||||
365 | Texas Instruments, Inc. | 8,561 | ||||||
67 | Varian Semiconductor Equipment Associates, Inc. • | 1,888 | ||||||
24 | Veeco Instruments, Inc. • | 586 | ||||||
26 | Xilinx, Inc. | 568 | ||||||
23,610 | ||||||||
Software & Services — 9.8% | ||||||||
63 | Accenture plc | 2,328 | ||||||
260 | Activision Blizzard, Inc. • | 2,814 | ||||||
228 | Adobe Systems, Inc. • | 7,507 | ||||||
212 | Alibaba.com Ltd. | 488 | ||||||
39 | AsiaInfo Holdings, Inc. • | 862 | ||||||
82 | Automatic Data Processing, Inc. | 3,271 | ||||||
26 | Autonomy Corp. plc • | 565 | ||||||
228 | BMC Software, Inc. • | 8,459 | ||||||
29 | CACI International, Inc. Class A • | 1,357 | ||||||
26 | Check Point Software Technologies Ltd. ADR • | 800 | ||||||
396 | Cia Brasileira de Meios de Pagamentos | 3,640 | ||||||
12 | Concur Technologies, Inc. • | 433 | ||||||
104 | eBay, Inc. • | 2,307 | ||||||
86 | Equinix, Inc. • | 7,343 | ||||||
29 | Google, Inc. • | 15,628 | ||||||
20 | Longtop Financial Technologies Ltd. • | 536 | ||||||
7 | Mastercard, Inc. | 1,594 | ||||||
118 | McAfee, Inc. • | 4,959 | ||||||
206 | Microsoft Corp. | 5,704 | ||||||
699 | Oracle Corp. | 14,740 | ||||||
251 | Red Hat, Inc. • | 6,479 | ||||||
9 | Shanda Interactive Entertainment Ltd. ADR • | 396 | ||||||
31 | Sohu.com, Inc. • | 1,719 | ||||||
82 | Tencent Holdings Ltd. | 1,433 | ||||||
71 | TiVo, Inc. • | 773 | ||||||
20 | Visa, Inc. | 1,495 | ||||||
12 | Vistaprint N.V. • | 597 | ||||||
31 | Western Union Co. | 568 | ||||||
175 | Yahoo!, Inc. • | 2,780 | ||||||
101,575 | ||||||||
Technology Hardware & Equipment — 8.9% | ||||||||
111 | Apple, Inc. • | 20,862 | ||||||
139 | Arrow Electronics, Inc. • | 3,528 | ||||||
51 | Avnet, Inc. • | 1,271 | ||||||
85 | BYD Co., Ltd. | 776 |
6
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 99.4% — (continued) | ||||||||||||
Technology Hardware & Equipment — 8.9% — (continued) | ||||||||||||
847 | Cisco Systems, Inc. • | $ | 19,363 | |||||||||
256 | Corning, Inc. | 3,747 | ||||||||||
143 | EMC Corp. • | 2,357 | ||||||||||
190 | Emulex Corp. • | 1,920 | ||||||||||
472 | Flextronics International Ltd. • | 3,057 | ||||||||||
51 | Hewlett-Packard Co. | 2,422 | ||||||||||
376 | Hughes Telematics, Inc. • | 1,119 | ||||||||||
66 | IBM Corp. | 7,936 | ||||||||||
11 | Itron, Inc. • | 666 | ||||||||||
61 | Jabil Circuit, Inc. | 821 | ||||||||||
289 | JDS Uniphase Corp. • | 1,614 | ||||||||||
24 | Juniper Networks, Inc. • | 623 | ||||||||||
108 | Motorola, Inc. | 926 | ||||||||||
88 | Qualcomm, Inc. | 3,644 | ||||||||||
45 | SanDisk Corp. • | 917 | ||||||||||
652 | Seagate Technology | 9,101 | ||||||||||
59 | Solar Cayman Ltd. ⌂•† | 477 | ||||||||||
463 | Telefonaktiebolaget LM Ericsson ADR | 4,816 | ||||||||||
24 | Trimble Navigation Ltd. • | 510 | ||||||||||
88 | ZTE Corp. | 489 | ||||||||||
92,962 | ||||||||||||
Telecommunication Services — 0.4% | ||||||||||||
17 | American Tower Corp. Class A • | 630 | ||||||||||
116 | AT&T, Inc. | 2,967 | ||||||||||
50 | Iridium Communications, Inc. | 445 | ||||||||||
4,042 | ||||||||||||
Transportation — 3.9% | ||||||||||||
126 | Air Asia BHD • | 50 | ||||||||||
30 | C.H. Robinson Worldwide, Inc. | 1,648 | ||||||||||
1,736 | Delta Air Lines, Inc. • | 12,393 | ||||||||||
15 | Deutsche Post AG | 249 | ||||||||||
151 | FedEx Corp. | 10,947 | ||||||||||
992 | JetBlue Airways Corp. • | 4,918 | ||||||||||
31 | Kansas City Southern • | 749 | ||||||||||
38 | Localiza Rent a Car S.A. | 395 | ||||||||||
88 | TNT N.V. | 2,336 | ||||||||||
110 | United Parcel Service, Inc. Class B | 5,905 | ||||||||||
397 | US Airways Group, Inc. • | 1,216 | ||||||||||
40,806 | ||||||||||||
Utilities — 1.1% | ||||||||||||
125 | Allegheny Energy, Inc. | 2,853 | ||||||||||
66 | Entergy Corp. | 5,025 | ||||||||||
21 | FirstEnergy Corp. | 887 | ||||||||||
111 | Northeast Utilities | 2,561 | ||||||||||
11,326 | ||||||||||||
Total common stocks (cost $933,097) | $ | 1,025,418 | ||||||||||
WARRANTS — 0.0% | ||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 0.0% | ||||||||||||
13 | Novavax, Inc. ⌂• | $ | 3 | |||||||||
Total warrants (cost $–) | $ | 3 | ||||||||||
Total long-term investments (cost $933,097) | $ | 1,025,421 | ||||||||||
SHORT-TERM INVESTMENTS — 1.6% | ||||||||||||
Repurchase Agreements — 1.6% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $679, collateralized by GNMA 5.00%, 2039, value of $693) | ||||||||||||
$ | 679 | 0.08%, 10/30/2009 | $ | 679 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $3,980, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $4,059) | ||||||||||||
3,980 | 0.08%, 10/30/2009 | 3,980 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $4,433, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $4,522) | ||||||||||||
4,433 | 0.08%, 10/30/2009 | 4,433 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $45, collateralized by U.S. Treasury Note 2.75%, 2013, value of $45) | ||||||||||||
45 | 0.05%, 10/30/2009 | 45 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $7,682, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $7,835) | ||||||||||||
7,682 | 0.07%, 10/30/2009 | 7,682 | ||||||||||
16,819 | ||||||||||||
Total short-term investments (cost $16,819) | $ | 16,819 | ||||||||||
Total investments (cost $949,916) ▲ | 101.0 | % | $ | 1,042,240 | ||||||||
Other assets and liabilities | (1.0 | )% | (10,378 | ) | ||||||||
Total net assets | 100.0 | % | $ | 1,031,862 | ||||||||
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 23.7% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $1,004,763 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 127,737 | ||
Unrealized Depreciation | (90,260 | ) | ||
Net Unrealized Appreciation | $ | 37,477 | ||
7
Schedule of Investments — (continued)
October 31, 2009
(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 October 31, 2009, was $2,237, which represents 0.22% of total net assets. This amount excludes securities that are principally traded in certain foreign markets and whose prices are 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 October 31, 2009, was $5,280, which represents 0.51% 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 | 1,405 | Buck Holdings L.P. | $ | 1,406 | ||||||
07/2008 | 13 | Novavax, Inc. Warrants | — | |||||||
03/2007 | 59 | Solar Cayman Ltd. — 144A | 778 |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
British Pound (Buy) | $ | 249 | $ | 249 | 11/02/09 | $ | — | |||||||||
British Pound (Buy) | 142 | 143 | 11/03/09 | (1 | ) | |||||||||||
Danish Krone (Sell) | 84 | 84 | 11/02/09 | — | ||||||||||||
Danish Krone (Sell) | 85 | 85 | 11/04/09 | — | ||||||||||||
Euro (Buy) | 366 | 370 | 11/03/09 | (4 | ) | |||||||||||
Euro (Sell) | 278 | 280 | 11/02/09 | 2 | ||||||||||||
Euro (Buy) | 666 | 666 | 11/04/09 | — | ||||||||||||
Hong Kong Dollar (Sell) | 155 | 155 | 11/02/09 | — | ||||||||||||
Japanese Yen (Buy) | 555 | 549 | 11/02/09 | 6 | ||||||||||||
Japanese Yen (Buy) | 620 | 615 | 11/04/09 | 5 | ||||||||||||
Japanese Yen (Buy) | 309 | 306 | 11/05/09 | 3 | ||||||||||||
Japanese Yen (Sell) | 73 | 72 | 11/02/09 | (1 | ) | |||||||||||
Japanese Yen (Sell) | 175 | 174 | 11/04/09 | (1 | ) | |||||||||||
Japanese Yen (Sell) | 31 | 31 | 11/05/09 | — | ||||||||||||
Singapore Dollar (Buy) | 41 | 41 | 11/02/09 | — | ||||||||||||
Singapore Dollar (Buy) | 35 | 35 | 11/03/09 | — | ||||||||||||
Swiss Franc (Buy) | 70 | 70 | 11/02/09 | — | ||||||||||||
Swiss Franc (Sell) | 390 | 389 | 11/02/09 | (1 | ) | |||||||||||
$ | 8 | |||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
8
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Automobiles & Components | $ | 23,298 | $ | 18,408 | $ | 4,890 | $ | — | ||||||||
Banks | 28,298 | 17,296 | 11,002 | — | ||||||||||||
Capital Goods | 53,284 | 50,501 | 2,783 | — | ||||||||||||
Commercial & Professional Services | 566 | 566 | — | — | ||||||||||||
Consumer Durables & Apparel | 53,667 | 48,698 | 4,969 | — | ||||||||||||
Consumer Services | 28,465 | 17,834 | 10,631 | — | ||||||||||||
Diversified Financials | 71,960 | 50,190 | 16,490 | 5,280 | ||||||||||||
Energy | 85,492 | 73,886 | 11,606 | — | ||||||||||||
Food & Staples Retailing | 11,677 | 9,265 | 2,412 | — | ||||||||||||
Food, Beverage & Tobacco | 21,013 | 7,536 | 13,477 | — | ||||||||||||
Health Care Equipment & Services | 48,955 | 48,526 | 429 | — | ||||||||||||
Household & Personal Products | 10,802 | 10,140 | 662 | — | ||||||||||||
Insurance | 58,365 | 54,065 | 4,300 | — | ||||||||||||
Materials | 79,140 | 53,467 | 25,673 | — | ||||||||||||
Media | 15,848 | 13,633 | 2,215 | — | ||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences | 72,897 | 62,587 | 10,310 | — | ||||||||||||
Real Estate | 9,842 | 3,398 | 6,444 | — | ||||||||||||
Retailing | 77,528 | 73,866 | 1,902 | 1,760 | ||||||||||||
Semiconductors & Semiconductor Equipment | 23,610 | 23,610 | — | — | ||||||||||||
Software & Services | 101,575 | 99,089 | 2,486 | — | ||||||||||||
Technology Hardware & Equipment | 92,962 | 91,220 | 1,265 | 477 | ||||||||||||
Telecommunication Services | 4,042 | 4,042 | — | — | ||||||||||||
Transportation | 40,806 | 38,171 | 2,635 | — | ||||||||||||
Utilities | 11,326 | 11,326 | — | — | ||||||||||||
Total | 1,025,418 | 881,320 | 136,581 | 7,517 | ||||||||||||
Warrants ‡ | 3 | — | 3 | — | ||||||||||||
Short-Term Investments | 16,819 | — | 16,819 | — | ||||||||||||
Total | $ | 1,042,240 | $ | 881,320 | $ | 153,403 | $ | 7,517 | ||||||||
Other Financial Instruments * | $ | 16 | $ | — | $ | 16 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 8 | $ | — | $ | 8 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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. |
Balance as of | Change in | Transfers In | Balance as of | |||||||||||||||||||||
October 31, | Realized Gain | Unrealized | and/or Out of | October 31, | ||||||||||||||||||||
2008 | (Loss) | Appreciation | Net Sales | Level 3 | 2009 | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Common Stock | $ | 8,596 | $ | (150 | ) | $ | 2,434 | * | $ | (388 | ) | $ | (2,975 | ) | $ | 7,517 | ||||||||
Total | $ | 8,596 | $ | (150 | ) | $ | 2,434 | $ | (388 | ) | $ | (2,975 | ) | $ | 7,517 | |||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $2,434. |
9
Assets: | ||||
Investments in securities, at market value (cost $949,916) | $ | 1,042,240 | ||
Cash | 3 | |||
Foreign currency on deposit with custodian (cost $4) | 4 | |||
Unrealized appreciation on forward foreign currency contracts | 16 | |||
Receivables: | ||||
Investment securities sold | 10,358 | |||
Fund shares sold | 2,029 | |||
Dividends and interest | 750 | |||
Other assets | 76 | |||
Total assets | 1,055,476 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 8 | |||
Payables: | ||||
Investment securities purchased | 19,062 | |||
Fund shares redeemed | 4,005 | |||
Investment management fees | 164 | |||
Distribution fees | 85 | |||
Accrued expenses | 290 | |||
Total liabilities | 23,614 | |||
Net assets | $ | 1,031,862 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 1,419,337 | |||
Accumulated net investment loss | (723 | ) | ||
Accumulated net realized loss on investments and foreign currency transactions | (479,084 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 92,332 | |||
Net assets | $ | 1,031,862 | ||
Shares authorized | 1,000,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 10.74/$11.37 | ||
Shares outstanding | 46,365 | |||
Net assets | $ | 497,959 | ||
Class B: Net asset value per share | $ | 10.35 | ||
Shares outstanding | 7,045 | |||
Net assets | $ | 72,940 | ||
Class C: Net asset value per share | $ | 10.39 | ||
Shares outstanding | 28,624 | |||
Net assets | $ | 297,280 | ||
Class I: Net asset value per share | $ | 10.86 | ||
Shares outstanding | 8,771 | |||
Net assets | $ | 95,280 | ||
Class R3: Net asset value per share | $ | 10.71 | ||
Shares outstanding | 753 | |||
Net assets | $ | 8,057 | ||
Class R4: Net asset value per share | $ | 10.82 | ||
Shares outstanding | 490 | |||
Net assets | $ | 5,308 | ||
Class R5: Net asset value per share | $ | 10.91 | ||
Shares outstanding | 75 | |||
Net assets | $ | 816 | ||
Class Y: Net asset value per share | $ | 10.96 | ||
Shares outstanding | 4,949 | |||
Net assets | $ | 54,222 | ||
10
Investment Income: | ||||
Dividends | $ | 14,482 | ||
Interest | 32 | |||
Securities lending | 26 | |||
Less: Foreign tax withheld | (465 | ) | ||
Total investment income | 14,075 | |||
Expenses: | ||||
Investment management fees | 8,599 | |||
Administrative services fees | 18 | |||
Transfer agent fees | 2,249 | |||
Distribution fees | ||||
Class A | 1,143 | |||
Class B | 648 | |||
Class C | 2,674 | |||
Class R3 | 30 | |||
Class R4 | 9 | |||
Custodian fees | 64 | |||
Accounting services fees | 128 | |||
Registration and filing fees | 164 | |||
Board of Directors’ fees | 24 | |||
Audit fees | 38 | |||
Other expenses | 310 | |||
Total expenses (before waivers and fees paid indirectly) | 16,098 | |||
Expense waivers | (60 | ) | ||
Transfer agent fee waivers | (80 | ) | ||
Commission recapture | (151 | ) | ||
Custodian fee offset | (1 | ) | ||
Total waivers and fees paid indirectly | (292 | ) | ||
Total expenses, net | 15,806 | |||
Net Investment Loss | (1,731 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (250,880 | ) | ||
Net realized loss on forward foreign currency contracts | (206 | ) | ||
Net realized loss on other foreign currency transactions | (187 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions | (251,273 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 441,216 | |||
Net unrealized appreciation of forward foreign currency contracts | 365 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (1 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 441,580 | |||
Net Gain on Investments and Foreign Currency Transactions | 190,307 | |||
Net Increase in Net Assets Resulting from Operations | $ | 188,576 | ||
11
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment loss | $ | (1,731 | ) | $ | (1,777 | ) | ||
Net realized loss on investments and foreign currency transactions | (251,273 | ) | (222,258 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 441,580 | (513,984 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 188,576 | (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 | (74,188 | ) | 118,490 | |||||
Class B | (6,129 | ) | 21,834 | |||||
Class C | (25,863 | ) | 101,804 | |||||
Class I | 3,462 | 56,898 | ||||||
Class R3 | 2,428 | 5,886 | ||||||
Class R4 | 3,159 | 1,828 | ||||||
Class R5 | 481 | 129 | ||||||
Class Y | 17,628 | 27,587 | ||||||
Net increase (decrease) from capital share transactions | (79,022 | ) | 334,456 | |||||
Net Increase (Decrease) In Net Assets | 109,554 | (504,382 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 922,308 | 1,426,690 | ||||||
End of period | $ | 1,031,862 | $ | 922,308 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | (723 | ) | $ | 361 | |||
12
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
13
Notes to Financial Statements — (continued)
October 31, 2009
(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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s Valuation Time. | |||
Options contracts on securities, currencies, indices, futures contracts, commodities and other instruments shall be valued at their last reported sale 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 sale price at the Valuation Time on another exchange or market where it did trade. If it is not possible to determine the last reported sale price on the Primary Market or another 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. Absent both bid and asked prices on such exchange, the bid price may be used. | |||
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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
14
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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 |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 October 31, 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 may use 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 October 31, 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 of the Fund are declared and paid annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), |
16
Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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 October 31, 2009, the Fund had no outstanding when-issued or delayed delivery securities. | ||
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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||||
Foreign exchange contracts | Unrealized appreciation on forward foreign currency contracts | $ | 16 | Unrealized depreciation on forward foreign currency contracts | $ | 8 |
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | (206 | ) | $ | — | $ | (206 | ) | ||||||||||
Equity contracts | — | (29 | ) | — | — | — | (29 | ) | ||||||||||||||||
Total | $ | — | $ | (29 | ) | $ | — | $ | (206 | ) | $ | — | $ | (235 | ) | |||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | 365 | — | $ | 365 | |||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | 365 | $ | — | $ | 365 | ||||||||||||
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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. | Futures and Options: |
Futures and Options Transactions — The Fund is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset 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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. As of October 31, 2009, there were no outstanding futures contracts. | |||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. As of October 31, 2009, there were no outstanding purchased or written option contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a RIC under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income |
18
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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | — | $ | 75,863 | ||||
Long-Term Capital Gains * | — | 24,956 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Accumulated Capital Losses * | $ | (424,954 | ) | |
Unrealized Appreciation † | 37,479 | |||
Total Accumulated Deficit | $ | (387,475 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase accumulated undistributed net investment income by $647, increase accumulated net realized gain on investments by $257, and decrease paid-in-capital by $904. |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 168,743 | ||
2017 | 256,211 | |||
Total | $ | 424,954 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
5. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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% |
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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.52 | % | 1.40 | % | 1.43 | % | 1.59 | % | 1.60 | %* | ||||||||||
Class B Shares | 2.21 | 2.27 | 2.29 | 2.34 | 2.35 | * | ||||||||||||||
Class C Shares | 2.24 | 2.14 | 2.16 | 2.32 | 2.35 | * | ||||||||||||||
Class I Shares | 1.14 | 1.08 | 1.10 | 0.80 | † | |||||||||||||||
Class R3 Shares. | 1.80 | 1.76 | 1.86‡ | |||||||||||||||||
Class R4 Shares. | 1.42 | 1.42 | 1.47‡ | |||||||||||||||||
Class R5 Shares. | 1.12 | 1.15 | 1.22‡ | |||||||||||||||||
Class Y Shares | 1.00 | 1.00 | 1.01 | 1.13 | 1.15 | * |
* | 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. |
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $1,432 and contingent deferred sales charges of $320 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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. |
21
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
For the year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $92. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $2,200 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
6. | Investment Transactions: |
For the year ended October 31, 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 | $ | 1,496,678 | ||
Sales Proceeds Excluding U.S. Government Obligations | 1,548,948 |
7. | Capital Share Transactions: |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 13,786 | — | (22,366 | ) | — | (8,580 | ) | 26,758 | 3,361 | (23,631 | ) | — | 6,488 | |||||||||||||||||||||||||||
Amount | $ | 119,964 | $ | — | $ | (194,152 | ) | $ | — | $ | (74,188 | ) | $ | 358,379 | $ | 49,988 | $ | (289,877 | ) | $ | — | $ | 118,490 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,109 | — | (1,860 | ) | — | (751 | ) | 2,420 | 475 | (1,411 | ) | — | 1,484 | |||||||||||||||||||||||||||
Amount | $ | 9,282 | $ | — | $ | (15,411 | ) | $ | — | $ | (6,129 | ) | $ | 31,700 | $ | 6,911 | $ | (16,777 | ) | $ | — | $ | 21,834 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 7,368 | — | (10,451 | ) | — | (3,083 | ) | 12,925 | 1,739 | (7,915 | ) | — | 6,749 | |||||||||||||||||||||||||||
Amount | $ | 61,399 | $ | — | $ | (87,262 | ) | $ | — | $ | (25,863 | ) | $ | 169,290 | $ | 25,354 | $ | (92,840 | ) | $ | — | $ | 101,804 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 7,144 | — | (7,401 | ) | — | (257 | ) | 8,574 | 326 | (4,802 | ) | — | 4,098 | |||||||||||||||||||||||||||
Amount | $ | 67,490 | $ | — | $ | (64,028 | ) | $ | — | $ | 3,462 | $ | 110,685 | $ | 4,865 | $ | (58,652 | ) | $ | — | $ | 56,898 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 475 | — | (197 | ) | — | 278 | 517 | 2 | (71 | ) | — | 448 | ||||||||||||||||||||||||||||
Amount | $ | 4,148 | $ | — | $ | (1,720 | ) | $ | — | $ | 2,428 | $ | 6,719 | $ | 33 | $ | (866 | ) | $ | — | $ | 5,886 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 496 | — | (146 | ) | — | 350 | 157 | — | (18 | ) | — | 139 | ||||||||||||||||||||||||||||
Amount | $ | 4,356 | $ | — | $ | (1,197 | ) | $ | — | $ | 3,159 | $ | 2,027 | $ | 1 | $ | (200 | ) | $ | — | $ | 1,828 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 71 | — | (13 | ) | — | 58 | 12 | 1 | (4 | ) | — | 9 | ||||||||||||||||||||||||||||
Amount | $ | 589 | $ | — | $ | (108 | ) | $ | — | $ | 481 | $ | 169 | $ | 12 | $ | (52 | ) | $ | — | $ | 129 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,923 | — | (437 | ) | — | 2,486 | 3,157 | 1 | (704 | ) | — | 2,454 | ||||||||||||||||||||||||||||
Amount | $ | 22,439 | $ | — | $ | (4,811 | ) | $ | — | $ | 17,628 | $ | 34,322 | $ | 11 | $ | (6,746 | ) | $ | — | $ | 27,587 |
22
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 103 | $ | 953 | |||||
For the Year Ended October 31, 2008 | 83 | $ | 1,097 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. | ||
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
23
Financial Highlights
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.73 | $ | — | $ | — | $ | 2.01 | $ | 2.01 | $ | — | $ | — | $ | — | $ | — | $ | 2.01 | $ | 10.74 | ||||||||||||||||||||||
B | 8.47 | (0.06 | ) | — | 1.94 | 1.88 | — | — | — | — | 1.88 | 10.35 | ||||||||||||||||||||||||||||||||
C | 8.50 | (0.06 | ) | — | 1.95 | 1.89 | — | — | — | — | 1.89 | 10.39 | ||||||||||||||||||||||||||||||||
I | 8.80 | 0.03 | — | 2.03 | 2.06 | — | — | — | — | 2.06 | 10.86 | |||||||||||||||||||||||||||||||||
R3 | 8.73 | (0.03 | ) | — | 2.01 | 1.98 | — | — | — | — | 1.98 | 10.71 | ||||||||||||||||||||||||||||||||
R4 | 8.79 | — | — | 2.03 | 2.03 | — | — | — | — | 2.03 | 10.82 | |||||||||||||||||||||||||||||||||
R5 | 8.84 | 0.02 | — | 2.05 | 2.07 | — | — | — | — | 2.07 | 10.91 | |||||||||||||||||||||||||||||||||
Y | 8.86 | 0.04 | — | 2.06 | 2.10 | — | — | — | — | 2.10 | 10.96 | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 16.95 | 0.02 | — | (7.07 | ) | (7.05 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.22 | ) | 8.73 | ||||||||||||||||||||||||||||
B | 16.62 | (0.09 | ) | — | (6.89 | ) | (6.98 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.15 | ) | 8.47 | |||||||||||||||||||||||||||
C | 16.66 | (0.07 | ) | — | (6.92 | ) | (6.99 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.16 | ) | 8.50 | |||||||||||||||||||||||||||
I | 17.02 | 0.04 | — | (7.09 | ) | (7.05 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.22 | ) | 8.80 | ||||||||||||||||||||||||||||
R3 | 17.00 | (0.01 | ) | — | (7.09 | ) | (7.10 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.27 | ) | 8.73 | |||||||||||||||||||||||||||
R4 | 17.05 | 0.01 | — | (7.10 | ) | (7.09 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.26 | ) | 8.79 | ||||||||||||||||||||||||||||
R5 | 17.10 | 0.04 | — | (7.13 | ) | (7.09 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.26 | ) | 8.84 | ||||||||||||||||||||||||||||
Y | 17.12 | — | — | (7.09 | ) | (7.09 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.26 | ) | 8.86 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 13.13 | — | — | 4.13 | 4.13 | — | (0.31 | ) | — | (0.31 | ) | 3.82 | 16.95 | |||||||||||||||||||||||||||||||
B | 12.99 | (0.07 | ) | — | 4.01 | 3.94 | — | (0.31 | ) | — | (0.31 | ) | 3.63 | 16.62 | ||||||||||||||||||||||||||||||
C | 13.00 | (0.06 | ) | — | 4.03 | 3.97 | — | (0.31 | ) | — | (0.31 | ) | 3.66 | 16.66 | ||||||||||||||||||||||||||||||
I | 13.14 | 0.02 | — | 4.17 | 4.19 | — | (0.31 | ) | — | (0.31 | ) | 3.88 | 17.02 | |||||||||||||||||||||||||||||||
R3(e) | 13.52 | (0.03 | ) | — | 3.51 | 3.48 | — | — | — | — | 3.48 | 17.00 | ||||||||||||||||||||||||||||||||
R4(e) | 13.52 | (0.01 | ) | — | 3.54 | 3.53 | — | — | — | — | 3.53 | 17.05 | ||||||||||||||||||||||||||||||||
R5(e) | 13.52 | — | — | 3.58 | 3.58 | — | — | — | — | 3.58 | 17.10 | |||||||||||||||||||||||||||||||||
Y | 13.20 | 0.06 | — | 4.17 | 4.23 | — | (0.31 | ) | — | (0.31 | ) | 3.92 | 17.12 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 11.07 | (0.01 | ) | — | 2.22 | 2.21 | — | (0.15 | ) | — | (0.15 | ) | 2.06 | 13.13 | ||||||||||||||||||||||||||||||
B | 11.02 | (0.07 | ) | — | 2.19 | 2.12 | — | (0.15 | ) | — | (0.15 | ) | 1.97 | 12.99 | ||||||||||||||||||||||||||||||
C | 11.04 | (0.06 | ) | — | 2.17 | 2.11 | — | (0.15 | ) | — | (0.15 | ) | 1.96 | 13.00 | ||||||||||||||||||||||||||||||
I(h) | 12.51 | — | — | 0.63 | 0.63 | — | — | — | — | 0.63 | 13.14 | |||||||||||||||||||||||||||||||||
Y | 11.08 | 0.12 | — | 2.15 | 2.27 | — | (0.15 | ) | — | (0.15 | ) | 2.12 | 13.20 | |||||||||||||||||||||||||||||||
From (commencement of operations) April 29, 2005, through October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A(i) | 10.00 | (0.01 | ) | — | 1.08 | 1.07 | — | — | — | — | 1.07 | 11.07 | ||||||||||||||||||||||||||||||||
B(i) | 10.00 | (0.03 | ) | — | 1.05 | 1.02 | — | — | — | — | 1.02 | 11.02 | ||||||||||||||||||||||||||||||||
C(i) | 10.00 | (0.03 | ) | — | 1.07 | 1.04 | — | — | — | — | 1.04 | 11.04 | ||||||||||||||||||||||||||||||||
Y(i) | 10.00 | 0.02 | — | 1.06 | 1.08 | — | — | — | — | 1.08 | 11.08 |
(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) | Commenced operations on December 22, 2006. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on August 31, 2006. | |
(i) | Commenced operations on April 29, 2005. |
24
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio | |||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Turnover Rate(d) | ||||||||||||||||||||
23.02 | % | $ | 497,959 | 1.54 | % | 1.54 | % | 1.54 | % | 0.02 | % | 168 | % | |||||||||||||
22.20 | 72,940 | 2.44 | 2.22 | 2.22 | (0.67 | ) | — | |||||||||||||||||||
22.23 | 297,280 | 2.25 | 2.25 | 2.25 | (0.70 | ) | — | |||||||||||||||||||
23.41 | 95,280 | 1.16 | 1.16 | 1.16 | 0.37 | — | ||||||||||||||||||||
22.68 | 8,057 | 1.81 | 1.81 | 1.81 | (0.30 | ) | — | |||||||||||||||||||
23.09 | 5,308 | 1.43 | 1.43 | 1.43 | 0.04 | — | ||||||||||||||||||||
23.42 | 816 | 1.14 | 1.14 | 1.14 | 0.29 | — | ||||||||||||||||||||
23.70 | 54,222 | 1.02 | 1.02 | 1.02 | 0.49 | — | ||||||||||||||||||||
(44.43 | ) | 479,795 | 1.40 | 1.40 | 1.40 | 0.12 | 159 | |||||||||||||||||||
(44.92 | ) | 66,057 | 2.27 | 2.27 | 2.27 | (0.75 | ) | — | ||||||||||||||||||
(44.87 | ) | 269,662 | 2.14 | 2.14 | 2.14 | (0.62 | ) | — | ||||||||||||||||||
(44.23 | ) | 79,436 | 1.08 | 1.08 | 1.08 | 0.43 | — | |||||||||||||||||||
(44.60 | ) | 4,148 | 1.77 | 1.77 | 1.77 | (0.28 | ) | — | ||||||||||||||||||
(44.40 | ) | 1,232 | 1.43 | 1.43 | 1.43 | 0.08 | — | |||||||||||||||||||
(44.26 | ) | 151 | 1.16 | 1.16 | 1.16 | 0.37 | — | |||||||||||||||||||
(44.20 | ) | 21,827 | 1.01 | 1.01 | 1.01 | 0.51 | — | |||||||||||||||||||
32.15 | 821,428 | 1.44 | 1.44 | 1.44 | — | 102 | ||||||||||||||||||||
31.01 | 104,908 | 2.29 | 2.29 | 2.29 | (0.86 | ) | — | |||||||||||||||||||
31.22 | 415,688 | 2.16 | 2.16 | 2.16 | (0.73 | ) | — | |||||||||||||||||||
32.60 | 83,905 | 1.11 | 1.11 | 1.11 | 0.31 | — | ||||||||||||||||||||
25.74 | (f) | 452 | 1.85 | (g) | 1.85 | (g) | 1.85 | (g) | (0.43 | ) (g) | — | |||||||||||||||
26.11 | (f) | 14 | 1.47 | (g) | 1.47 | (g) | 1.47 | (g) | (0.06 | ) (g) | — | |||||||||||||||
26.48 | (f) | 136 | 1.22 | (g) | 1.22 | (g) | 1.22 | (g) | 0.03 | (g) | — | |||||||||||||||
32.75 | 158 | 1.02 | 1.02 | 1.02 | 0.44 | — | ||||||||||||||||||||
20.21 | 241,238 | 1.66 | 1.60 | 1.60 | (0.13 | ) | 113 | |||||||||||||||||||
19.48 | 29,169 | 2.54 | 2.35 | 2.35 | (0.88 | ) | — | |||||||||||||||||||
19.35 | 97,678 | 2.37 | 2.33 | 2.33 | (0.86 | ) | — | |||||||||||||||||||
5.04 | (f) | 3,316 | 1.46 | (g) | 0.80 | (g) | 0.80 | (g) | 0.45 | (g) | — | |||||||||||||||
20.74 | 119 | 1.20 | 1.15 | 1.15 | 0.39 | — | ||||||||||||||||||||
10.70 | (f) | 56,981 | 1.99 | (g) | 1.60 | (g) | 1.60 | (g) | (0.30 | ) (g) | 46 | |||||||||||||||
10.20 | (f) | 6,343 | 2.97 | (g) | 2.35 | (g) | 2.35 | (g) | (1.10 | ) (g) | — | |||||||||||||||
10.40 | (f) | 19,494 | 2.82 | (g) | 2.35 | (g) | 2.35 | (g) | (1.12 | ) (g) | — | |||||||||||||||
10.80 | (f) | 332 | 1.41 | (g) | 1.15 | (g) | 1.15 | (g) | 0.29 | (g) | — |
25
December 15, 2009
26
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
27
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 – 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 – 2009. |
28
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
29
30
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,221.80 | $ | 8.40 | $ | 1,000.00 | $ | 1,017.64 | $ | 7.63 | 1 .50 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,216.20 | $ | 12.68 | $ | 1,000.00 | $ | 1,013.76 | $ | 11.52 | 2 .27 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,218.10 | $ | 12.30 | $ | 1,000.00 | $ | 1,014.12 | $ | 11.17 | 2 .20 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,223.00 | $ | 6.28 | $ | 1,000.00 | $ | 1,019.56 | $ | 5.70 | 1 .12 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,219.80 | $ | 10.02 | $ | 1,000.00 | $ | 1,016.18 | $ | 9.10 | 1 .79 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,221.20 | $ | 7.89 | $ | 1,000.00 | $ | 1,018.10 | $ | 7.17 | 1 .41 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,224.50 | $ | 6.22 | $ | 1,000.00 | $ | 1,019.61 | $ | 5.65 | 1 .11 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,224.60 | $ | 5.61 | $ | 1,000.00 | $ | 1,020.16 | $ | 5.09 | 1 .00 | 184 | 365 |
31
32
33
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
34
The Hartford Mutual Funds are underwritten and distributed by Hartford Investment Financial Services, LLC. “The Hartford” is The Hartford Financial Services Group, Inc., and its subsidiaries. Mutual fund inception dates range from 1949 to date. The Hartford Mutual Funds are not a subsidiary of The Hartford but are underwritten, distributed by, and advised by subsidiaries of The Hartford. Investments in The Hartford Mutual Funds are not guaranteed by The Hartford or any other entity. MFAR-4 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06115 |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 |
(advised by Hartford Investment Financial Services, LLC) |
Performance Overview(1) 5/31/07 — 10/31/09 | Investment objective — Seeks long-term capital appreciation and income. |
1 | Since | |||||||
Year | Inception | |||||||
Checks and Balances A# | 17.34 | % | -5.00 | % | ||||
Checks and Balances A## | 10.89 | % | -7.19 | % | ||||
Checks and Balances B# | 16.56 | % | -5.72 | % | ||||
Checks and Balances B## | 11.56 | % | -6.85 | % | ||||
Checks and Balances C# | 16.56 | % | -5.71 | % | ||||
Checks and Balances C## | 15.56 | % | -5.71 | % | ||||
Checks and Balances I# | 17.68 | % | -4.80 | % | ||||
Checks and Balances R3# | 17.18 | % | -5.10 | % | ||||
Checks and Balances R4# | 17.30 | % | -5.00 | % | ||||
Checks and Balances R5# | 17.65 | % | -4.87 | % | ||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 7.10 | % | ||||
Russell 3000 Index | 10.83 | % | -13.04 | % | ||||
S&P 500 Index | 9.78 | % | -12.92 | % |
# | 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) | 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 10/31/09, 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. Classes R3, R4 and R5 shares commenced operations on 8/29/08. Performance prior to 8/29/08 reflects Class A performance. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Vernon J. Meyer, CFA
Senior Vice President
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
The Hartford Capital Appreciation Fund, Class Y | 32 .8 | % | ||
The Hartford Dividend and Growth Fund, Class Y | 32 .7 | |||
The Hartford Total Return Bond Fund, Class Y | 34 .1 | |||
Other Assets and Liabilities | 0 .4 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 99.6% | ||||||||||||
EQUITY FUNDS - 65.5% | ||||||||||||
16,625 | The Hartford Capital Appreciation Fund, Class Y | $ | 502,739 | |||||||||
30,911 | The Hartford Dividend and Growth Fund, Class Y | 502,301 | ||||||||||
Total equity funds (cost $1,152,265) | $ | 1,005,040 | ||||||||||
FIXED INCOME FUNDS - 34.1% | ||||||||||||
50,639 | The Hartford Total Return Bond Fund, Class Y | $ | 523,603 | |||||||||
Total fixed income funds (cost $515,152) | $ | 523,603 | ||||||||||
Total investments in affiliated investment companies (cost $1,667,417) | $ | 1,528,643 | ||||||||||
Total long-term investments (cost $1,667,417) | $ | 1,528,643 | ||||||||||
Total investments (cost $1,667,417) ▲ | 99.6 | % | $ | 1,528,643 | ||||||||
Other assets and liabilities | 0.4 | % | 5,989 | |||||||||
Total net assets | 100.0 | % | $ | 1,534,632 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $1,674,291 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 8,451 | ||
Unrealized Depreciation | (154,099 | ) | ||
Net Unrealized Depreciation | $ | (145,648 | ) | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 1,528,643 | $ | 1,528,643 | $ | — | $ | — | ||||||||
Total | $ | 1,528,643 | $ | 1,528,643 | $ | — | $ | — | ||||||||
5
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in underlying affiliated funds, at market value (cost $1,667,417) | $ | 1,528,643 | ||
Receivables: | ||||
Fund shares sold | 9,763 | |||
Dividends and interest | 1,690 | |||
Other assets | 91 | |||
Total assets | 1,540,187 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 2,407 | |||
Fund shares redeemed | 2,762 | |||
Distribution fees | 118 | |||
Accrued expenses | 268 | |||
Total liabilities | 5,555 | |||
Net assets | $ | 1,534,632 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 1,680,936 | |||
Accumulated undistributed net investment income | 699 | |||
Accumulated net realized loss on investments | (8,229 | ) | ||
Unrealized depreciation of investments | (138,774 | ) | ||
Net assets | $ | 1,534,632 | ||
Shares authorized | 1,000,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.29/$8.77 | ||
Shares outstanding | 129,481 | |||
Net assets | $ | 1,073,060 | ||
Class B: Net asset value per share | $ | 8.26 | ||
Shares outstanding | 17,182 | |||
Net assets | $ | 141,845 | ||
Class C: Net asset value per share | $ | 8.26 | ||
Shares outstanding | 36,191 | |||
Net assets | $ | 298,931 | ||
Class I: Net asset value per share | $ | 8.29 | ||
Shares outstanding | 2,411 | |||
Net assets | $ | 19,988 | ||
Class R3: Net asset value per share | $ | 8.29 | ||
Shares outstanding | 72 | |||
Net assets | $ | 598 | ||
Class R4: Net asset value per share | $ | 8.29 | ||
Shares outstanding | 14 | |||
Net assets | $ | 112 | ||
Class R5: Net asset value per share | $ | 8.29 | ||
Shares outstanding | 12 | |||
Net assets | $ | 98 | ||
6
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends from underlying affiliated funds | $ | 33,612 | ||
Total investment income | 33,612 | |||
Expenses: | ||||
Administrative services fees | 1 | |||
Transfer agent fees | 1,732 | |||
Distribution fees | ||||
Class A | 1,978 | |||
Class B | 1,091 | |||
Class C | 2,365 | |||
Class R3 | 1 | |||
Class R4 | — | |||
Custodian fees | 1 | |||
Accounting services fees | 138 | |||
Registration and filing fees | 218 | |||
Board of Directors’ fees | 28 | |||
Audit fees | 56 | |||
Other expenses | 366 | |||
Total expenses (before waivers) | 7,975 | |||
Expense waivers | (90 | ) | ||
Total waivers | (90 | ) | ||
Total expenses, net | 7,885 | |||
Net Investment Income | 25,727 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (5,518 | ) | ||
Net Realized Loss on Investments | (5,518 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 182,304 | |||
Net Changes in Unrealized Appreciation of Investments | 182,304 | |||
Net Gain on Investments | 176,786 | |||
Net Increase in Net Assets Resulting from Operations | $ | 202,513 | ||
7
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 25,727 | $ | 12,797 | ||||
Net realized gain (loss) on investments | (5,518 | ) | 6,765 | |||||
Net unrealized appreciation (depreciation) of investments | 182,304 | (329,223 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 202,513 | (309,661 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (19,857 | ) | (10,497 | ) | ||||
Class B | (1,937 | ) | (874 | ) | ||||
Class C | (4,371 | ) | (2,405 | ) | ||||
Class I | (319 | ) | (47 | ) | ||||
Class R3 | (4 | ) | — | |||||
Class R4 | (2 | ) | (1 | ) | ||||
Class R5 | (2 | ) | (1 | ) | ||||
From net realized gain on investments | ||||||||
Class A | (4,882 | ) | — | |||||
Class B | (672 | ) | — | |||||
Class C | (1,587 | ) | — | |||||
Class I | (62 | ) | — | |||||
Class R3 | (1 | ) | — | |||||
Class R4 | — | — | ||||||
Class R5 | — | — | ||||||
Total distributions | (33,696 | ) | (13,825 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 306,059 | 696,123 | ||||||
Class B | 36,819 | 97,717 | ||||||
Class C | 54,694 | 229,519 | ||||||
Class I | 10,072 | 10,092 | ||||||
Class R3 | 448 | 101 | ||||||
Class R4 | 21 | 100 | ||||||
Class R5 | 8 | 101 | ||||||
Net increase from capital share transactions | 408,121 | 1,033,753 | ||||||
Net Increase In Net Assets | 576,938 | 710,267 | ||||||
Net Assets: | ||||||||
Beginning of period | 957,694 | 247,427 | ||||||
End of period | $ | 1,534,632 | $ | 957,694 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 699 | $ | 1,464 | ||||
8
October 31, 2009
(000’s Omitted)
1. | Organization: |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (see note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. |
The Fund as a “Fund of Funds”, seeks its investment goal through investment in Class Y shares of a combination of Hartford mutual funds (“Underlying 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 September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 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 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. |
9
October 31, 2009
(000’s Omitted)
b) | Security Valuation - Investments in open-end mutual funds are valued at the respective per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. |
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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. 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 Valuation Time. 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 are 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. |
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. |
10
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. |
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. |
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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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) | 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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) - Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. |
11
October 31, 2009
(000’s Omitted)
Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
c) | Distributions and Components of Distributable Earnings - 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 26,491 | $ | 13,825 | ||||
Long-Term Capital Gains * | 7,205 | — |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 699 | ||
Accumulated Capital Losses * | (1,355 | ) | ||
Unrealized Depreciation † | (145,648 | ) | ||
Total Accumulated Deficit | $ | (146,304 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts - The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. |
e) | Capital Loss Carryforward - At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2017 | $ | 1,355 | ||
Total | $ | 1,355 | ||
f) | Accounting for Uncertainty in Income Taxes - Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement - HIFSCO serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Company. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and |
12
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 services 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 year ended October 31, 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% |
Effective November 1, 2009, HIFSCO has agreed to revise the voluntary limit (which is the permanent expense limitation) on total operating expenses for the Fund, exclusive of taxes, interest, brokerage commissions, certain distribution expenses and extraordinary expenses. The new expense limitation is as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | ||||||
1.25% | 2.00% | 2.00% | 1.00% | 1.55% | 1.25% | 1.05% |
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $17,758 and contingent deferred sales charges of $614 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 |
13
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $359. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $1,663 for providing such services. These fees are accrued daily and paid monthly. |
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of October 31, 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 year ended October 31, 2009, the cost of purchases and proceeds from sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 431,694 | ||
Sales Proceeds Excluding U.S. Government Obligations | 31,927 |
14
7. | Capital Share Transactions: |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 65,149 | 3,383 | (27,811 | ) | — | 40,721 | 82,896 | 1,054 | (11,616 | ) | — | 72,334 | ||||||||||||||||||||||||||||
Amount | $ | 482,643 | $ | 23,741 | $ | (200,325 | ) | $ | — | $ | 306,059 | $ | 788,469 | $ | 9,911 | $ | (102,257 | ) | $ | — | $ | 696,123 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 7,305 | 358 | (2,601 | ) | — | 5,062 | 11,434 | 86 | (1,283 | ) | — | 10,237 | ||||||||||||||||||||||||||||
Amount | $ | 52,801 | $ | 2,466 | $ | (18,448 | ) | $ | — | $ | 36,819 | $ | 108,095 | $ | 808 | $ | (11,186 | ) | $ | — | $ | 97,717 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 14,827 | 767 | (8,403 | ) | — | 7,191 | 27,792 | 217 | (4,262 | ) | — | 23,747 | ||||||||||||||||||||||||||||
Amount | $ | 109,066 | $ | 5,275 | $ | (59,647 | ) | $ | — | $ | 54,694 | $ | 264,512 | $ | 2,054 | $ | (37,047 | ) | $ | — | $ | 229,519 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,231 | 47 | (1,000 | ) | — | 1,278 | 1,291 | 4 | (162 | ) | — | 1,133 | ||||||||||||||||||||||||||||
Amount | $ | 17,045 | $ | 329 | $ | (7,302 | ) | $ | — | $ | 10,072 | $ | 11,382 | $ | 39 | $ | (1,329 | ) | $ | — | $ | 10,092 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 64 | 1 | (4 | ) | — | 61 | 11 | — | — | — | 11 | |||||||||||||||||||||||||||||
Amount | $ | 475 | $ | 5 | $ | (32 | ) | $ | — | $ | 448 | $ | 101 | $ | — | $ | — | $ | — | $ | 101 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 3 | — | — | — | 3 | 11 | — | — | — | 11 | ||||||||||||||||||||||||||||||
Amount | $ | 19 | $ | 3 | $ | (1 | ) | $ | — | $ | 21 | $ | 100 | $ | — | $ | — | $ | — | $ | 100 | |||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1 | — | — | — | 1 | 11 | — | — | — | 11 | ||||||||||||||||||||||||||||||
Amount | $ | 5 | $ | 3 | $ | — | $ | — | $ | 8 | $ | 100 | $ | 1 | $ | — | $ | — | $ | 101 | ||||||||||||||||||||
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 98 | $ | 738 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. |
9. | Subsequent Events: |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.32 | $ | 0.19 | $ | — | $ | 1.03 | $ | 1.22 | $ | (0.20 | ) | $ | (0.05 | ) | $ | — | $ | (0.25 | ) | $ | 0.97 | $ | 8.29 | |||||||||||||||||||
B | 7.29 | 0.13 | — | 1.04 | 1.17 | (0.15 | ) | (0.05 | ) | — | (0.20 | ) | 0.97 | 8.26 | ||||||||||||||||||||||||||||||
C | 7.29 | 0.13 | — | 1.04 | 1.17 | (0.15 | ) | (0.05 | ) | — | (0.20 | ) | 0.97 | 8.26 | ||||||||||||||||||||||||||||||
I | 7.32 | 0.21 | — | 1.03 | 1.24 | (0.22 | ) | (0.05 | ) | — | (0.27 | ) | 0.97 | 8.29 | ||||||||||||||||||||||||||||||
R3 | 7.31 | 0.17 | — | 1.04 | 1.21 | (0.18 | ) | (0.05 | ) | — | (0.23 | ) | 0.98 | 8.29 | ||||||||||||||||||||||||||||||
R4 | 7.32 | 0.19 | — | 1.03 | 1.22 | (0.20 | ) | (0.05 | ) | — | (0.25 | ) | 0.97 | 8.29 | ||||||||||||||||||||||||||||||
R5 | 7.32 | 0.21 | — | 1.03 | 1.24 | (0.22 | ) | (0.05 | ) | — | (0.27 | ) | 0.97 | 8.29 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.51 | 0.21 | — | (3.17 | ) | (2.96 | ) | (0.23 | ) | — | — | (0.23 | ) | (3.19 | ) | 7.32 | ||||||||||||||||||||||||||||
B | 10.49 | 0.15 | — | (3.19 | ) | (3.04 | ) | (0.16 | ) | — | — | (0.16 | ) | (3.20 | ) | 7.29 | ||||||||||||||||||||||||||||
C | 10.49 | 0.15 | — | (3.18 | ) | (3.03 | ) | (0.17 | ) | — | — | (0.17 | ) | (3.20 | ) | 7.29 | ||||||||||||||||||||||||||||
I(e) | 9.89 | 0.14 | — | (2.57 | ) | (2.43 | ) | (0.14 | ) | — | — | (0.14 | ) | (2.57 | ) | 7.32 | ||||||||||||||||||||||||||||
R3(h) | 9.38 | 0.03 | — | (2.06 | ) | (2.03 | ) | (0.04 | ) | — | — | (0.04 | ) | (2.07 | ) | 7.31 | ||||||||||||||||||||||||||||
R4(h) | 9.38 | 0.03 | — | (2.05 | ) | (2.02 | ) | (0.04 | ) | — | — | (0.04 | ) | (2.06 | ) | 7.32 | ||||||||||||||||||||||||||||
R5(h) | 9.38 | 0.03 | — | (2.04 | ) | (2.01 | ) | (0.05 | ) | — | — | (0.05 | ) | (2.06 | ) | 7.32 | ||||||||||||||||||||||||||||
From (commencement of operations) May 31, 2007, through October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A(i) | 10.00 | 0.05 | — | 0.51 | 0.56 | (0.05 | ) | — | — | (0.05 | ) | 0.51 | 10.51 | |||||||||||||||||||||||||||||||
B(i) | 10.00 | 0.03 | — | 0.49 | 0.52 | (0.03 | ) | — | — | (0.03 | ) | 0.49 | 10.49 | |||||||||||||||||||||||||||||||
C(i) | 10.00 | 0.03 | — | 0.49 | 0.52 | (0.03 | ) | — | — | (0.03 | ) | 0.49 | 10.49 |
(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) | Commenced operations on February 29, 2008. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on August 29, 2008. | |
(i) | Commenced operations on May 31, 2007. |
16
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||
17.34 | % | $ | 1,073,060 | 0.46 | % | 0.46 | % | 0.46 | % | 2.45 | % | 3 | % | |||||||||||||||
16.56 | 141,845 | 1.31 | 1.23 | 1.23 | 1.68 | — | ||||||||||||||||||||||
16.56 | 298,931 | 1.22 | 1.22 | 1.22 | 1.76 | — | ||||||||||||||||||||||
17.68 | 19,988 | 0.20 | 0.20 | 0.20 | 2.61 | — | ||||||||||||||||||||||
17.18 | 598 | 0.87 | 0.78 | 0.78 | 1.46 | — | ||||||||||||||||||||||
17.30 | 112 | 0.49 | 0.48 | 0.48 | 2.48 | — | ||||||||||||||||||||||
17.65 | 98 | 0.17 | 0.17 | 0.17 | 2.84 | — | ||||||||||||||||||||||
(28.70 | ) | 649,297 | 0.42 | 0.41 | 0.41 | 2.08 | 6 | |||||||||||||||||||||
(29.32 | ) | 88,364 | 1.26 | 1.23 | 1.23 | 1.22 | — | |||||||||||||||||||||
(29.29 | ) | 211,502 | 1.17 | 1.17 | 1.17 | 1.26 | — | |||||||||||||||||||||
(23.71 | )(f) | 8,293 | 0.16 | (g) | 0.16 | (g) | 0.16 | (g) | 2.09 | (g) | — | |||||||||||||||||
(21.19 | )(f) | 80 | 0.81 | (g) | 0.80 | (g) | 0.80 | (g) | 1.93 | (g) | — | |||||||||||||||||
(21.06 | )(f) | 79 | 0.51 | (g) | 0.50 | (g) | 0.50 | (g) | 2.23 | (g) | — | |||||||||||||||||
(21.04 | )(f) | 79 | 0.21 | (g) | 0.21 | (g) | 0.21 | (g) | 2.52 | (g) | — | |||||||||||||||||
5.56 | (f) | 172,572 | 0.43 | (g) | 0.43 | (g) | 0.43 | (g) | 1.77 | (g) | — | |||||||||||||||||
5.24 | (f) | 19,750 | 1.26 | (g) | 1.25 | (g) | 1.25 | (g) | 0.96 | (g) | — | |||||||||||||||||
5.23 | (f) | 55,105 | 1.18 | (g) | 1.18 | (g) | 1.18 | (g) | 1.02 | (g) | — |
17
The Hartford Mutual Funds, Inc.
December 15, 2009
18
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
19
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 — 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009. |
20
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
21
U.S. Treasury* | 3.00 | % | ||
Other Direct Federal Obligations* | 1.00 | % | ||
Other Securities | 96.00 | % | ||
Total | 100.00 | % | ||
DRD† | 60.00 | % | ||
QDI‡ | 60.00 | % | ||
QII§ | 50.00 | % |
* | The income received from federal obligations. | |
† | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
‡ | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. | |
§ | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.195 | N/A | 0.054 | 0.249 | ||||||||||||
Class B | 0.141 | N/A | 0.054 | 0.195 | ||||||||||||
Class C | 0.141 | N/A | 0.054 | 0.195 | ||||||||||||
Class I | 0.215 | N/A | 0.054 | 0.269 | ||||||||||||
Class R3 | 0.174 | N/A | 0.054 | 0.228 | ||||||||||||
Class R4 | 0.191 | N/A | 0.054 | 0.245 | ||||||||||||
Class R5 | 0.214 | N/A | 0.054 | 0.268 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,170.80 | $ | 2.52 | $ | 1,000.00 | $ | 1,022.89 | $ | 2.35 | 0.46 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,167.30 | $ | 6.66 | $ | 1,000.00 | $ | 1,019.06 | $ | 6.21 | 1.22 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,165.80 | $ | 6.66 | $ | 1,000.00 | $ | 1,019.06 | $ | 6.21 | 1.22 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,172.40 | $ | 1.20 | $ | 1,000.00 | $ | 1,024.10 | $ | 1.12 | 0.22 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,169.10 | $ | 4.26 | $ | 1,000.00 | $ | 1,021.27 | $ | 3.97 | 0.78 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,170.50 | $ | 2.68 | $ | 1,000.00 | $ | 1,022.74 | $ | 2.50 | 0.49 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,172.30 | $ | 0.99 | $ | 1,000.00 | $ | 1,024.30 | $ | 0.92 | 0.18 | 184 | 365 |
23
24
25
26
The Hartford |
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Conservativ e Al ocation Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
18 | ||||
20 | ||||
21 | ||||
23 | ||||
23 | ||||
24 | ||||
25 | ||||
26 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks current income and long-term capital appreciation. |
Performance Overview(1) 5/28/04 — 10/31/09 Growth of a $10,000 investment in Class A which includes Sales Charge |
Conservative Allocation ABarclays Capital U.S. $9,450 starting value Aggregate Bond Index $11,364 ending value $10,000 starting value $13,390 ending value S&P 500 Index $10,000 starting value $10,327 ending value |
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
Conservative Allocation A# | 18.90 | % | 3.15 | % | 3.46 | % | ||||||
Conservative Allocation A## | 12.36 | % | 1.99 | % | 2.38 | % | ||||||
Conservative Allocation B# | 18.01 | % | 2.43 | % | 2.74 | % | ||||||
Conservative Allocation B## | 13.01 | % | 2.09 | % | 2.59 | % | ||||||
Conservative Allocation C# | 18.04 | % | 2.44 | % | 2.75 | % | ||||||
Conservative Allocation C## | 17.04 | % | 2.44 | % | 2.75 | % | ||||||
Conservative Allocation I# | 19.19 | % | 3.33 | % | 3.62 | % | ||||||
Conservative Allocation R3# | 18.22 | % | 2.87 | % | 3.20 | % | ||||||
Conservative Allocation R4# | 18.89 | % | 3.12 | % | 3.43 | % | ||||||
Conservative Allocation R5# | 19.22 | % | 3.29 | % | 3.58 | % | ||||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 5.05 | % | 5.52 | % | ||||||
S&P 500 Index | 9.78 | % | 0.33 | % | 0.59 | % |
# | 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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
as of October 31, 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 | 0.7 | |||
State Street Bank Money Market Fund | 0.0 | |||
The Hartford Capital Appreciation Fund, Class Y | 9.5 | |||
The Hartford Capital Appreciation II Fund, Class Y | 2.4 | |||
The Hartford Disciplined Equity Fund, Class Y | 5.7 | |||
The Hartford Dividend and Growth Fund, Class Y | 1.6 | |||
The Hartford Equity Income Fund, Class Y | 2.6 | |||
The Hartford Floating Rate Fund, Class Y | 8.0 | |||
The Hartford Fundamental Growth Fund, Class Y | 0.6 | |||
The Hartford Global Equity Fund, Class Y | 0.1 | |||
The Hartford Global Growth Fund, Class Y | 2.4 | |||
The Hartford Growth Opportunities Fund, Class Y | 1.9 | |||
The Hartford High Yield Fund, Class Y | 5.1 | |||
The Hartford Income Fund, Class Y | 9.5 | |||
The Hartford Inflation Plus Fund, Class Y | 11.1 | |||
The Hartford International Opportunities Fund, Class Y | 3.7 | |||
The Hartford International Small Company Fund, Class Y | 2.2 | |||
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 | 1.7 | |||
The Hartford Total Return Bond Fund, Class Y | 14.1 | |||
The Hartford Value Fund, Class Y | 4.1 | |||
The Hartford Value Opportunities Fund, Class Y | 0.1 | |||
Other Assets and Liabilities | 0.3 | |||
Total | 100.0 | % | ||
3
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 98.3% | ||||||||||||
EQUITY FUNDS — 38.6% | ||||||||||||
692 | The Hartford Capital Appreciation Fund, Class Y | $ | 20,931 | |||||||||
491 | The Hartford Capital Appreciation II Fund, Class Y• | 5,377 | ||||||||||
1,162 | The Hartford Disciplined Equity Fund, Class Y | 12,505 | ||||||||||
220 | The Hartford Dividend and Growth Fund, Class Y | 3,582 | ||||||||||
522 | The Hartford Equity Income Fund, Class Y | 5,644 | ||||||||||
146 | The Hartford Fundamental Growth Fund, Class Y• | 1,378 | ||||||||||
16 | The Hartford Global Equity Fund, Class Y | 130 | ||||||||||
392 | The Hartford Global Growth Fund, Class Y• | 5,228 | ||||||||||
198 | The Hartford Growth Opportunities Fund, Class Y• | 4,265 | ||||||||||
627 | The Hartford International Opportunities Fund, Class Y | 8,191 | ||||||||||
448 | The Hartford International Small Company Fund, Class Y | 4,884 | ||||||||||
193 | The Hartford Select MidCap Value Fund, Class Y | 1,483 | ||||||||||
267 | The Hartford Select SmallCap Value Fund, Class Y | 2,129 | ||||||||||
943 | The Hartford Value Fund, Class Y | 9,009 | ||||||||||
19 | The Hartford Value Opportunities Fund, Class Y | 203 | ||||||||||
Total equity funds (cost $88,690) | $ | 84,939 | ||||||||||
FIXED INCOME FUNDS — 59.7% | ||||||||||||
2,135 | The Hartford Floating Rate Fund, Class Y | $ | 17,701 | |||||||||
1,664 | The Hartford High Yield Fund, Class Y | 11,198 | ||||||||||
2,205 | The Hartford Income Fund, Class Y | 20,994 | ||||||||||
2,133 | The Hartford Inflation Plus Fund, Class Y | 24,380 | ||||||||||
2,340 | The Hartford Short Duration Fund, Class Y | 22,462 | ||||||||||
430 | The Hartford Strategic Income Fund, Class Y | 3,741 | ||||||||||
3,002 | The Hartford Total Return Bond Fund, Class Y | 31,045 | ||||||||||
Total fixed income funds (cost $131,124) | $ | 131,521 | ||||||||||
Total investments in affiliated investment companies (cost $219,814) | $ | 216,460 | ||||||||||
EXCHANGE TRADED FUNDS — 1.4% | ||||||||||||
26 | Powershares Emerging Markets Sovereign Debt Portfolio ETF | $ | 667 | |||||||||
26 | SPDR DJ Wilshire International Real Estate ETF | 908 | ||||||||||
33 | SPDR DJ Wilshire REIT ETF | 1,441 | ||||||||||
Total exchange traded funds (cost $2,668) | $ | 3,016 | ||||||||||
Total long-term investments (cost $222,482) | $ | 219,476 | ||||||||||
SHORT-TERM INVESTMENTS — 0.0% | ||||||||||||
Investment Pools and Funds - 0.0% | ||||||||||||
4 | State Street Bank Money Market Fund | $ | 4 | |||||||||
Total short-term investments (cost $4) | $ | 4 | ||||||||||
Total investments (cost $222,486)5 | 99.7 | % | $ | 219,480 | ||||||||
Other assets and liabilities | 0.3 | % | 622 | |||||||||
Total net assets | 100.0 | % | $ | 220,102 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
5 | At October 31, 2009, the cost of securities for federal income tax purposes was $223,803 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 7,039 | ||
Unrealized Depreciation | (11,362 | ) | ||
Net Unrealized Depreciation | $ | (4,323 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 216,460 | $ | 216,460 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 3,016 | 3,016 | — | — | ||||||||||||
Short-Term Investments | 4 | 4 | — | — | ||||||||||||
Total | $ | 219,480 | $ | 219,480 | $ | — | $ | — | ||||||||
5
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $2,672) | $ | 3,020 | ||
Investments in underlying affiliated funds, at market value (cost $219,814) | 216,460 | |||
Receivables: | ||||
Fund shares sold | 669 | |||
Dividends and interest | 527 | |||
Other assets | 46 | |||
Total assets | �� | 220,722 | ||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 203 | |||
Fund shares redeemed | 356 | |||
Investment management fees | 5 | |||
Distribution fees | 18 | |||
Accrued expenses | 38 | |||
Total liabilities | 620 | |||
Net assets | $ | 220,102 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 243,488 | |||
Accumulated undistributed net investment income | 495 | |||
Accumulated net realized loss on investments | (20,875 | ) | ||
Unrealized depreciation of investments | (3,006 | ) | ||
Net assets | $ | 220,102 | ||
Shares authorized | 400,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 9.57/$10.13 | ||
Shares outstanding | 14,087 | |||
Net assets | $ | 134,824 | ||
Class B: Net asset value per share | $ | 9.57 | ||
Shares outstanding | 2,555 | |||
Net assets | $ | 24,438 | ||
Class C: Net asset value per share | $ | 9.56 | ||
Shares outstanding | 4,842 | |||
Net assets | $ | 46,279 | ||
Class I: Net asset value per share | $ | 9.56 | ||
Shares outstanding | 95 | |||
Net assets | $ | 908 | ||
Class R3: Net asset value per share | $ | 9.61 | ||
Shares outstanding | 71 | |||
Net assets | $ | 680 | ||
Class R4: Net asset value per share | $ | 9.56 | ||
Shares outstanding | 845 | |||
Net assets | $ | 8,078 | ||
Class R5: Net asset value per share | $ | 9.57 | ||
Shares outstanding | 511 | |||
Net assets | $ | 4,895 | �� | |
6
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 116 | ||
Dividends from underlying affiliated funds | 6,673 | |||
Interest | — | |||
Total investment income | 6,789 | |||
Expenses: | ||||
Investment management fees | 280 | |||
Administrative services fees | 14 | |||
Transfer agent fees | 226 | |||
Distribution fees | ||||
Class A | 288 | |||
Class B | 213 | |||
Class C | 396 | |||
Class R3 | 2 | |||
Class R4 | 16 | |||
Custodian fees | 1 | |||
Accounting services fees | 22 | |||
Registration and filing fees | 116 | |||
Board of Directors’ fees | 7 | |||
Audit fees | 11 | |||
Other expenses | 50 | |||
Total expenses (before waivers) | 1,642 | |||
Expense waivers | (21 | ) | ||
Total waivers | (21 | ) | ||
Total expenses, net | 1,621 | |||
Net Investment Income | 5,168 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (11,636 | ) | ||
Net Realized Loss on Investments | (11,636 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 39,820 | |||
Net Changes in Unrealized Appreciation of Investments | 39,820 | |||
Net Gain on Investments | 28,184 | |||
Net Increase in Net Assets Resulting from Operations | $ | 33,352 | ||
7
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 5,168 | $ | 5,728 | ||||
Net realized loss on investments | (11,636 | ) | (5,242 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 39,820 | (53,423 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 33,352 | (52,937 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (3,426 | ) | (4,987 | ) | ||||
Class B | (474 | ) | (812 | ) | ||||
Class C | (897 | ) | (1,672 | ) | ||||
Class I | (14 | ) | (45 | ) | ||||
Class R3 | (8 | ) | (5 | ) | ||||
Class R4 | (192 | ) | (153 | ) | ||||
Class R5 | (104 | ) | (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 | (5,115 | ) | (14,491 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 9,353 | * | 26,954 | |||||
Class B | 554 | † | 2,936 | |||||
Class C | 527 | ‡ | 9,856 | |||||
Class I | 413 | (817 | ) | |||||
Class R3 | 309 | § | 324 | |||||
Class R4 | 2,169 | ** | 6,057 | |||||
Class R5 | 2,177 | †† | 2,011 | |||||
Net increase from capital share transactions | 15,502 | 47,321 | ||||||
Net Increase (Decrease) In Net Assets | 43,739 | (20,107 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 176,363 | 196,470 | ||||||
End of period | $ | 220,102 | $ | 176,363 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 495 | $ | 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. |
8
October 31, 2009
(000’s Omitted)
1. | Organization: |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 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 September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 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 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. |
9
October 31, 2009
(000’s Omitted)
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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. |
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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. 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 Valuation Time. 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 are 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. |
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable representation of exit price. |
10
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. |
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. |
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. |
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 may use 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 October 31, 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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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 (“RIC”) under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially |
11
October 31, 2009
(000’s Omitted)
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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 5,115 | $ | 8,611 | ||||
Long-Term Capital Gains * | — | 5,880 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 495 | ||
Accumulated Capital Losses * | (19,558 | ) | ||
Unrealized Depreciation † | (4,323 | ) | ||
Total Accumulated Deficit | $ | (23,386 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated net realized loss on investments by $1 and increase paid-in-capital by $1. |
12
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2015 | $ | 659 | ||
2016 | 7,466 | |||
2017 | 11,433 | |||
Total | $ | 19,558 | ||
As a result of current or past mergers in the Fund, certain provisions in the Internal Revenue Code may limit the future utilization of capital losses. |
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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 | % |
13
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $1,036 and contingent deferred sales charges of $78 from the Fund. |
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $33. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $223 for providing such services. These fees are accrued daily and paid monthly. |
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: |
For the year ended October 31, 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 | $ | 52,969 | ||
Sales Proceeds Excluding U.S. Government Obligations | 36,389 |
14
6. | Capital Share Transactions: |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 5,490 | 392 | (5,081 | ) | 287 | 1,088 | 6,078 | 809 | (4,337 | ) | — | 2,550 | ||||||||||||||||||||||||||||
Amount | $ | 46,887 | $ | 3,271 | $ | (43,018 | ) | $ | 2,213 | $ | 9,353 | $ | 62,170 | $ | 8,613 | $ | (43,829 | ) | $ | — | $ | 26,954 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 671 | 53 | (701 | ) | 37 | 60 | 875 | 145 | (754 | ) | — | 266 | ||||||||||||||||||||||||||||
Amount | $ | 5,631 | $ | 436 | $ | (5,803 | ) | $ | 290 | $ | 554 | $ | 8,914 | $ | 1,556 | $ | (7,534 | ) | $ | — | $ | 2,936 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,613 | 92 | (1,796 | ) | 102 | 11 | 3,122 | 258 | (2,546 | ) | — | 834 | ||||||||||||||||||||||||||||
Amount | $ | 13,731 | $ | 760 | $ | (14,752 | ) | $ | 788 | $ | 527 | $ | 32,319 | $ | 2,758 | $ | (25,221 | ) | $ | — | $ | 9,856 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 101 | 1 | (57 | ) | — | 45 | 91 | 7 | (177 | ) | — | (79 | ) | |||||||||||||||||||||||||||
Amount | $ | 908 | $ | 9 | $ | (504 | ) | $ | — | $ | 413 | $ | 937 | $ | 83 | $ | (1,837 | ) | $ | — | $ | (817 | ) | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 125 | 1 | (92 | ) | 5 | 39 | 129 | — | (99 | ) | — | 30 | ||||||||||||||||||||||||||||
Amount | $ | 1,082 | $ | 8 | $ | (819 | ) | $ | 38 | $ | 309 | $ | 1,324 | $ | 4 | $ | (1,004 | ) | $ | — | $ | 324 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 414 | 23 | (237 | ) | 54 | 254 | 777 | 17 | (240 | ) | — | 554 | ||||||||||||||||||||||||||||
Amount | $ | 3,452 | $ | 192 | $ | (1,893 | ) | $ | 418 | $ | 2,169 | $ | 8,088 | $ | 174 | $ | (2,205 | ) | $ | — | $ | 6,057 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 325 | 12 | (91 | ) | 12 | 258 | 242 | 8 | (57 | ) | — | 193 | ||||||||||||||||||||||||||||
Amount | $ | 2,760 | $ | 104 | $ | (778 | ) | $ | 91 | $ | 2,177 | $ | 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) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 40 | $ | 349 | |||||
For the Year Ended October 31, 2008 | 32 | $ | 328 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. |
8. | 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 provided for the reorganization of a series of the Company, The Hartford Retirement Income Fund (“Target Fund”), into another series of the Company, The Hartford Conservative Allocation Fund (“Acquiring Fund”) (the “Reorganization”). The reorganization did not require shareholder approval by shareholders of The Hartford Conservative Allocation Fund or The Hartford Retirement Income Fund. |
15
October 31, 2009
(000’s Omitted)
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 and fractional 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: |
Net assets of | ||||||||||||||||||||
Acquiring Fund | Net assets of | Acquiring | ||||||||||||||||||
Net assets of Target | shares issued to the | Acquiring Fund | Fund | |||||||||||||||||
Fund on Merger | Target Fund shares | Target Fund’s | immediately before | immediately | ||||||||||||||||
Date | exchanged | shareholders | merger | after merger | ||||||||||||||||
Class A | $ | 2,213 | 305 | 287 | $ | 101,250 | $ | 103,463 | ||||||||||||
Class B | 290 | 40 | 37 | 18,900 | 19,190 | |||||||||||||||
Class C | 788 | 108 | 102 | 35,423 | 36,211 | |||||||||||||||
Class I | N/A | N/A | N/A | 340 | 340 | |||||||||||||||
Class R3 | 38 | 5 | 5 | 41 | 79 | |||||||||||||||
Class R4 | 418 | 58 | 54 | 6,085 | 6,503 | |||||||||||||||
Class R5 | 91 | 13 | 12 | 2,870 | 2,961 | |||||||||||||||
Total | $ | 3,838 | 529 | 497 | $ | 164,909 | $ | 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 Appreciation | Accumulated Net | |||||||||||
Fund | (Depreciation) | Realized Gains (Losses) | Capital Stock | |||||||||
Target Fund | $ | (586 | ) | $ | (1,542 | ) | $ | 5,966 |
9. | Subsequent Events: |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
16
17
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.30 | $ | 0.25 | $ | — | $ | 1.28 | $ | 1.53 | $ | (0.26 | ) | $ | — | $ | — | $ | (0.26 | ) | $ | 1.27 | $ | 9.57 | ||||||||||||||||||||
B | 8.30 | 0.19 | — | 1.27 | 1.46 | (0.19 | ) | — | — | (0.19 | ) | 1.27 | 9.57 | |||||||||||||||||||||||||||||||
C | 8.29 | 0.19 | — | 1.27 | 1.46 | (0.19 | ) | — | — | (0.19 | ) | 1.27 | 9.56 | |||||||||||||||||||||||||||||||
I | 8.29 | 0.26 | — | 1.29 | 1.55 | (0.28 | ) | — | — | (0.28 | ) | 1.27 | 9.56 | |||||||||||||||||||||||||||||||
R3 | 8.28 | 0.17 | — | 1.32 | 1.49 | (0.16 | ) | — | — | (0.16 | ) | 1.33 | 9.61 | |||||||||||||||||||||||||||||||
R4 | 8.29 | 0.25 | — | 1.27 | 1.52 | (0.25 | ) | — | — | (0.25 | ) | 1.27 | 9.56 | |||||||||||||||||||||||||||||||
R5 | 8.30 | 0.26 | — | 1.29 | 1.55 | (0.28 | ) | — | — | (0.28 | ) | 1.27 | 9.57 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 11.62 | 0.24 | — | (2.82 | ) | (2.58 | ) | (0.34 | ) | (0.40 | ) | — | (0.74 | ) | (3.32 | ) | 8.30 | |||||||||||||||||||||||||||
C | 11.62 | 0.23 | — | (2.81 | ) | (2.58 | ) | (0.35 | ) | (0.40 | ) | — | (0.75 | ) | (3.33 | ) | 8.29 | |||||||||||||||||||||||||||
I | 11.61 | 0.39 | — | (2.86 | ) | (2.47 | ) | (0.45 | ) | (0.40 | ) | — | (0.85 | ) | (3.32 | ) | 8.29 | |||||||||||||||||||||||||||
R3 | 11.61 | 0.32 | — | (2.86 | ) | (2.54 | ) | (0.39 | ) | (0.40 | ) | — | (0.79 | ) | (3.33 | ) | 8.28 | |||||||||||||||||||||||||||
R4 | 11.62 | 0.34 | — | (2.85 | ) | (2.51 | ) | (0.42 | ) | (0.40 | ) | — | (0.82 | ) | (3.33 | ) | 8.29 | |||||||||||||||||||||||||||
R5 | 11.63 | 0.39 | — | (2.87 | ) | (2.48 | ) | (0.45 | ) | (0.40 | ) | — | (0.85 | ) | (3.33 | ) | 8.30 | |||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 11.16 | 0.25 | — | 0.80 | 1.05 | (0.30 | ) | (0.29 | ) | — | (0.59 | ) | 0.46 | 11.62 | ||||||||||||||||||||||||||||||
C | 11.15 | 0.25 | — | 0.81 | 1.06 | (0.30 | ) | (0.29 | ) | — | (0.59 | ) | 0.47 | 11.62 | ||||||||||||||||||||||||||||||
I | 11.16 | 0.38 | — | 0.78 | 1.16 | (0.42 | ) | (0.29 | ) | — | (0.71 | ) | 0.45 | 11.61 | ||||||||||||||||||||||||||||||
R3(g) | 10.95 | 0.16 | — | 0.70 | 0.86 | (0.20 | ) | — | — | (0.20 | ) | 0.66 | 11.61 | |||||||||||||||||||||||||||||||
R4(g) | 10.95 | 0.20 | — | 0.70 | 0.90 | (0.23 | ) | — | — | (0.23 | ) | 0.67 | 11.62 | |||||||||||||||||||||||||||||||
R5(g) | 10.95 | 0.24 | — | 0.68 | 0.92 | (0.24 | ) | — | — | (0.24 | ) | 0.68 | 11.63 | |||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 10.56 | 0.19 | — | 0.76 | 0.95 | (0.23 | ) | (0.12 | ) | — | (0.35 | ) | 0.60 | 11.16 | ||||||||||||||||||||||||||||||
C | 10.56 | 0.19 | — | 0.76 | 0.95 | (0.24 | ) | (0.12 | ) | — | (0.36 | ) | 0.59 | 11.15 | ||||||||||||||||||||||||||||||
I(j) | 10.94 | 0.07 | — | 0.22 | 0.29 | (0.07 | ) | — | — | (0.07 | ) | 0.22 | 11.16 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.27 | 0.23 | — | 0.28 | 0.51 | (0.21 | ) | — | — | (0.21 | ) | 0.30 | 10.57 | |||||||||||||||||||||||||||||||
B | 10.26 | 0.16 | — | 0.28 | 0.44 | (0.14 | ) | — | — | (0.14 | ) | 0.30 | 10.56 | |||||||||||||||||||||||||||||||
C | 10.26 | 0.16 | — | 0.28 | 0.44 | (0.14 | ) | — | — | (0.14 | ) | 0.30 | 10.56 |
(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) | During the year ended October 31, 2009, The Hartford Conservative Allocation Fund incurred $0.2 million in sales associated with the transition of assets from The Hartford Retirement Income Fund, which merge into The Fund on February 20, 2009. These sales are excluded from the portfolio turnover rate calculation. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Not annualized. | |
(i) | Annualized. | |
(j) | Commenced operations on August 31, 2006. |
18
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||
18.90% | $ | 134,824 | 0.62 | % | 0.62 | % | 0.62 | % | 3.00 | % | 20 | %(f) | ||||||||||||
18.01 | 24,438 | 1.46 | 1.38 | 1.38 | 2.26 | — | ||||||||||||||||||
18.04 | 46,279 | 1.39 | 1.38 | 1.38 | 2.28 | — | ||||||||||||||||||
19.19 | 908 | 0.36 | 0.36 | 0.36 | 3.17 | — | ||||||||||||||||||
18.22 | 680 | 1.02 | 1.02 | 1.02 | 2.06 | — | ||||||||||||||||||
18.89 | 8,078 | 0.66 | 0.66 | 0.66 | 2.94 | — | ||||||||||||||||||
19.22 | 4,895 | 0.36 | 0.36 | 0.36 | 3.10 | — | ||||||||||||||||||
(22.99) | 107,922 | 0.57 | 0.57 | 0.57 | 3.09 | 27 | ||||||||||||||||||
(23.55) | 20,703 | 1.40 | 1.40 | 1.40 | 2.29 | — | ||||||||||||||||||
(23.57) | 40,054 | 1.33 | 1.33 | 1.33 | 2.23 | — | ||||||||||||||||||
(22.73) | 418 | 0.31 | 0.31 | 0.31 | 4.43 | — | ||||||||||||||||||
(23.28) | 269 | 0.97 | 0.97 | 0.97 | 2.01 | — | ||||||||||||||||||
(23.01) | 4,900 | 0.63 | 0.63 | 0.63 | 2.21 | — | ||||||||||||||||||
(22.81) | 2,097 | 0.34 | 0.34 | 0.34 | 2.84 | — | ||||||||||||||||||
10.64 | 121,488 | 0.59 | 0.59 | 0.59 | 2.91 | 40 | ||||||||||||||||||
9.81 | 25,903 | 1.42 | 1.28 | 1.28 | 2.25 | — | ||||||||||||||||||
9.91 | 46,433 | 1.35 | 1.28 | 1.28 | 2.17 | — | ||||||||||||||||||
10.86 | 1,502 | 0.27 | 0.27 | 0.27 | 2.64 | — | ||||||||||||||||||
7.93(h) | 20 | 1.05 | (i) | 1.03 | (i) | 1.03 | (i) | 1.87 | (i) | — | ||||||||||||||
8.25(h) | 429 | 0.75 | (i) | 0.75 | (i) | 0.75 | (i) | 2.26 | (i) | — | ||||||||||||||
8.53(h) | 695 | 0.48 | (i) | 0.46 | (i) | 0.46 | (i) | 2.41 | (i) | — | ||||||||||||||
9.85 | 93,504 | 0.64 | 0.63 | 0.63 | 2.41 | 29 | ||||||||||||||||||
9.19 | 20,782 | 1.48 | 1.31 | 1.31 | 1.73 | — | ||||||||||||||||||
9.10 | 36,123 | 1.41 | 1.31 | 1.31 | 1.67 | — | ||||||||||||||||||
2.69(h) | 10 | 0.72 | (i) | 0.41 | (i) | 0.41 | (i) | 2.07 | (i) | — | ||||||||||||||
4.96 | 70,533 | 0.63 | 0.60 | 0.60 | 2.25 | 23 | ||||||||||||||||||
4.26 | 14,525 | 1.48 | 1.26 | 1.26 | 1.60 | — | ||||||||||||||||||
4.26 | 27,453 | 1.42 | 1.26 | 1.26 | 1.56 | — |
19
The Hartford Mutual Funds, Inc.
December 15, 2009
20
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
21
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 — 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009. |
22
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
23
U.S. Treasury* | 5.00 | % | ||
Other Direct Federal Obligations* | 1.00 | % | ||
Other Securities | 94.00 | % | ||
Total | 100.00 | % | ||
DRD† | 25.00 | % | ||
QDI‡ | 25.00 | % | ||
QII§ | 80.00 | % |
* | The income received from federal obligations. | |
† | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
‡ | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. | |
§ | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.257 | N/A | N/A | 0.257 | ||||||||||||
Class B | 0.192 | N/A | N/A | 0.192 | ||||||||||||
Class C | 0.193 | N/A | N/A | 0.193 | ||||||||||||
Class I | 0.276 | N/A | N/A | 0.276 | ||||||||||||
Class R3 | 0.157 | N/A | N/A | 0.157 | ||||||||||||
Class R4 | 0.254 | N/A | N/A | 0.254 | ||||||||||||
Class R5 | 0.279 | N/A | N/A | 0.279 |
24
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,162.30 | $ | 3.38 | $ | 1,000.00 | $ | 1,022.08 | $ | 3.16 | 0.62 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,158.10 | $ | 7.51 | $ | 1,000.00 | $ | 1,018.25 | $ | 7.02 | 1.38 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,158.40 | $ | 7.51 | $ | 1,000.00 | $ | 1,018.25 | $ | 7.02 | 1.38 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,164.00 | $ | 1.85 | $ | 1,000.00 | $ | 1,023.49 | $ | 1.73 | 0.34 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,158.00 | $ | 5.55 | $ | 1,000.00 | $ | 1,020.06 | $ | 5.19 | 1.02 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,162.30 | $ | 3.60 | $ | 1,000.00 | $ | 1,021.88 | $ | 3.36 | 0.66 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,163.80 | $ | 1.96 | $ | 1,000.00 | $ | 1,023.39 | $ | 1.84 | 0.36 | 184 | 365 |
25
26
27
28
29
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
22 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 | ||||
29 | ||||
30 |
The Hartford Disciplined Equity Fund inception 04/30/1998 (subadvised by Wellington Management Company, LLP) | Investment objective — Seeks growth of capital. |
Performance Overview(1) 10/31/99 — 10/31/09 Growth of a $10,000 investment in Class A which includes Sales Charge |
1 | 5 | 10 | ||||||||||
Year | Year | Year | ||||||||||
Disciplined Equity A# | 12.82 | % | 0.03 | % | -1.01 | % | ||||||
Disciplined Equity A## | 6.62 | % | -1.09 | % | -1.57 | % | ||||||
Disciplined Equity B# | 12.39 | % | -0.58 | % | NA* | |||||||
Disciplined Equity B## | 7.39 | % | -0.98 | % | NA* | |||||||
Disciplined Equity C# | 11.82 | % | -0.72 | % | -1.72 | % | ||||||
Disciplined Equity C## | 10.82 | % | -0.72 | % | -1.72 | % | ||||||
Disciplined Equity R3# | 12.65 | % | 0.11 | % | -0.71 | % | ||||||
Disciplined Equity R4# | 12.65 | % | 0.25 | % | -0.64 | % | ||||||
Disciplined Equity R5# | 13.12 | % | 0.43 | % | -0.55 | % | ||||||
Disciplined Equity Y# | 13.25 | % | 0.50 | % | -0.52 | % | ||||||
S&P 500 Index | 9.78 | % | 0.33 | % | -0.95 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year 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) | Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||
James A. Rullo, CFA | Mammen Chally, CFA | |
Senior Vice President, Partner | Vice President |
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 1.1 | % | ||
Banks (Financials) | 4.8 | |||
Capital Goods (Industrials) | 6.9 | |||
Commercial & Professional Services (Industrials) | 0.7 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 0.5 | |||
Consumer Services (Consumer Discretionary) | 1.4 | |||
Diversified Financials (Financials) | 4.5 | |||
Energy (Energy) | 10.8 | |||
Food & Staples Retailing (Consumer Staples) | 1.4 | |||
Food, Beverage & Tobacco (Consumer Staples) | 7.0 | |||
Health Care Equipment & Services (Health Care) | 3.5 | |||
Insurance (Financials) | 6.0 | |||
Materials (Materials) | 1.3 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 14.0 | |||
Real Estate (Financials) | 0.9 | |||
Retailing (Consumer Discretionary) | 6.3 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 3.2 | |||
Software & Services (Information Technology) | 10.3 | |||
Technology Hardware & Equipment (Information Technology) | 8.0 | |||
Telecommunication Services (Services) | 2.1 | |||
Utilities (Utilities) | 4.8 | |||
Short-Term Investments | 0.2 | |||
Other Assets and Liabilities | 0.3 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 99.5% | ||||||||
Automobiles & Components — 1.1% | ||||||||
145 | Ford Motor Co. •Ø | $ | 1,013 | |||||
51 | TRW Automotive Holdings Corp. • | 790 | ||||||
1,803 | ||||||||
Banks — 4.8% | ||||||||
63 | PNC Financial Services Group, Inc. | 3,068 | ||||||
178 | Wells Fargo & Co. | 4,896 | ||||||
7,964 | ||||||||
Capital Goods — 6.9% | ||||||||
50 | Dover Corp. Ø | 1,888 | ||||||
35 | Fluor Corp. | 1,541 | ||||||
41 | General Dynamics Corp. | 2,596 | ||||||
17 | Northrop Grumman Corp. | 837 | ||||||
24 | Precision Castparts Corp. | 2,331 | ||||||
14 | Raytheon Co. | 611 | ||||||
30 | United Technologies Corp. | 1,844 | ||||||
11,648 | ||||||||
Commercial & Professional Services — 0.7% | ||||||||
25 | Manpower, Inc. | 1,176 | ||||||
Consumer Durables & Apparel — 0.5% | ||||||||
59 | Newell Rubbermaid, Inc. | 849 | ||||||
Consumer Services — 1.4% | ||||||||
24 | Apollo Group, Inc. Class A •Ø | 1,353 | ||||||
11 | ITT Educational Services, Inc. • | 958 | ||||||
2,311 | ||||||||
Diversified Financials — 4.5% | ||||||||
31 | Ameriprise Financial, Inc. | 1,061 | ||||||
192 | Bank of America Corp | 2,794 | ||||||
21 | Goldman Sachs Group, Inc. | 3,573 | ||||||
7,428 | ||||||||
Energy — 10.8% | ||||||||
34 | ConocoPhillips Holding Co. Ø | 1,716 | ||||||
21 | Consol Energy, Inc. | 916 | ||||||
9 | Diamond Offshore Drilling, Inc. Θ | 886 | ||||||
36 | Hess Corp. Ø | 1,954 | ||||||
84 | Marathon Oil Corp. | 2,673 | ||||||
92 | Nabors Industries Ltd. • | 1,910 | ||||||
32 | National Oilwell Varco, Inc. •Ø | 1,328 | ||||||
37 | Occidental Petroleum Corp. | 2,808 | ||||||
21 | Peabody Energy Corp. | 816 | ||||||
33 | Ultra Petroleum Corp. • | 1,621 | ||||||
32 | XTO Energy, Inc. | 1,322 | ||||||
17,950 | ||||||||
Food & Staples Retailing — 1.4% | ||||||||
34 | BJ’s Wholesale Club, Inc. • | 1,184 | ||||||
33 | Walgreen Co. | 1,248 | ||||||
2,432 | ||||||||
Food, Beverage & Tobacco — 7.0% | ||||||||
143 | Altria Group, Inc. | 2,597 | ||||||
17 | Archer Daniels Midland Co. | 497 | ||||||
27 | Dr. Pepper Snapple Group • | 742 | ||||||
22 | Lorillard, Inc. | 1,710 | ||||||
33 | PepsiCo, Inc. | 2,016 | ||||||
89 | Philip Morris International, Inc. | 4,234 | ||||||
11,796 | ||||||||
Health Care Equipment & Services — 3.5% | ||||||||
33 | Medtronic, Inc. | 1,189 | ||||||
62 | St. Jude Medical, Inc. • | 2,109 | ||||||
57 | UnitedHealth Group, Inc. | 1,484 | ||||||
22 | Wellpoint, Inc. • | 1,034 | ||||||
5,816 | ||||||||
Insurance — 6.0% | ||||||||
45 | Allied World Assurance Holdings Ltd. | 1,996 | ||||||
71 | Axis Capital Holdings Ltd. | 2,037 | ||||||
26 | Everest Re Group Ltd. | 2,266 | ||||||
91 | Genworth Financial, Inc. | 968 | ||||||
37 | Lincoln National Corp. ØΘ | 887 | ||||||
17 | Prudential Financial, Inc . | 787 | ||||||
57 | Unum Group | 1,143 | ||||||
10,084 | ||||||||
Materials — 1.3% | ||||||||
19 | Freeport-McMoRan Copper & Gold, Inc. | 1,401 | ||||||
19 | Mosaic Co. Θ | 888 | ||||||
2,289 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 14.0% | ||||||||
40 | Abbott Laboratories | 2,013 | ||||||
62 | Amgen, Inc. •Ø | 3,348 | ||||||
118 | Bristol-Myers Squibb Co. | 2,581 | ||||||
92 | Eli Lilly & Co. | 3,132 | ||||||
114 | Forest Laboratories, Inc. • | 3,157 | ||||||
34 | Gilead Sciences, Inc. • | 1,438 | ||||||
28 | Johnson & Johnson | 1,659 | ||||||
63 | Merck & Co., Inc. | 1,958 | ||||||
92 | Pfizer, Inc. | 1,566 | ||||||
92 | Schering-Plough Corp. | 2,606 | ||||||
23,458 | ||||||||
Real Estate — 0.9% | ||||||||
89 | Annaly Capital Management, Inc. | 1,505 | ||||||
Retailing — 6.3% | ||||||||
16 | Amazon.com, Inc. • | 1,889 | ||||||
3 | AutoZone, Inc. • | 446 | ||||||
29 | Best Buy Co., Inc. | 1,096 | ||||||
36 | Big Lots, Inc. • | 897 | ||||||
142 | Gap, Inc. | 3,032 | ||||||
51 | Macy’s, Inc. | 892 | ||||||
161 | Office Depot, Inc. • | 976 | ||||||
37 | TJX Cos., Inc. | 1,375 | ||||||
10,603 | ||||||||
Semiconductors & Semiconductor Equipment — 3.2% | ||||||||
32 | Maxim Integrated Products, Inc. | 540 | ||||||
135 | ON Semiconductor Corp. • | 904 | ||||||
95 | Texas Instruments, Inc. Ø | 2,225 | ||||||
76 | Xilinx, Inc. | 1,642 | ||||||
5,311 | ||||||||
Software & Services — 10.3% | ||||||||
38 | Accenture plc | 1,401 | ||||||
22 | BMC Software, Inc. • | 832 | ||||||
35 | eBay, Inc. • | 788 | ||||||
6 | Google, Inc. | 3,056 | ||||||
4 | Mastercard, Inc. | 811 | ||||||
166 | Microsoft Corp. | 4,609 | ||||||
149 | Oracle Corp. | 3,148 | ||||||
14 | Sohu.com, Inc. • | 779 |
4
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 99.5% — (continued) | ||||||||||||
Software & Services — 10.3% — (continued) | ||||||||||||
47 | VeriSign, Inc. • | $ | 1,072 | |||||||||
46 | Western Union Co. | 841 | ||||||||||
17,337 | ||||||||||||
Technology Hardware & Equipment — 8.0% | ||||||||||||
24 | Apple, Inc. • | 4,562 | ||||||||||
85 | Cisco Systems, Inc. | 1,931 | ||||||||||
38 | Hewlett-Packard Co. | 1,780 | ||||||||||
21 | IBM Corp. | 2,533 | ||||||||||
29 | Qualcomm, Inc. Ø | 1,188 | ||||||||||
92 | Seagate Technology | 1,279 | ||||||||||
13,273 | ||||||||||||
Telecommunication Services — 2.1% | ||||||||||||
136 | AT&T, Inc. | 3,484 | ||||||||||
Utilities - 4.8% | ||||||||||||
38 | Entergy Corp. | 2,931 | ||||||||||
39 | Exelon Corp. | 1,850 | ||||||||||
37 | FirstEnergy Corp. | 1,588 | ||||||||||
8 | PG&E Corp. | 344 | ||||||||||
60 | UGI Corp. | 1,433 | ||||||||||
8,146 | ||||||||||||
Total common stocks (cost $164,714) | $ | 166,663 | ||||||||||
Total long-term investments (cost $164,714) | $ | 166,663 | ||||||||||
SHORT-TERM INVESTMENTS — 0.2% | ||||||||||||
Repurchase Agreements — 0.2% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $13, collateralized by GNMA 5.00%, 2039, value of $13) | ||||||||||||
$ | 13 | 0.08%, 10/30/2009 | $ | 13 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $76, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $77) | ||||||||||||
76 | 0.08%, 10/30/2009 | 76 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $85, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $86) | ||||||||||||
85 | 0.08%, 10/30/2009 | 85 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1, collateralized by U.S. Treasury Note 2.75%, 2013, value of $1) | ||||||||||||
1 | 0.05%, 10/30/2009 | 1 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $147, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $150) | ||||||||||||
146 | 0.07%, 10/30/2009 | 146 | ||||||||||
321 | ||||||||||||
Total short-term investments (cost $321) | $ | 321 | ||||||||||
Total investments (cost $165,035) 5 | 99.7 | % | $ | 166,984 | ||||||||
Other assets and liabilities | 0.3 | % | 469 | |||||||||
Total net assets | 100.0 | % | $ | 167,453 | ||||||||
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 0.5% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $165,386 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 19,790 | ||
Unrealized Depreciation | (18,192 | ) | ||
Net Unrealized Appreciation | $ | 1,598 | ||
• | Currently non-income producing. | |
Θ | At October 31, 2009, these securities were designated to cover open call options written as follows: |
Unrealized | ||||||||||||||||
Issuer/ Exercise Price/ | Number of | Market | Premiums | Appreciation | ||||||||||||
Expiration Date | Contracts* | Value ╪ | Received | (Depreciation) | ||||||||||||
Diamond Offshore Drilling, Inc., $110.00, Nov, 2009 | 17 | $ | 1 | $ | 2 | $ | 1 | |||||||||
Lincoln National Corp., $27.00, Nov, 2009 | 72 | 4 | 14 | 10 | ||||||||||||
Mosaic Co., $60.00, Nov, 2009 | 35 | – | 3 | 3 | ||||||||||||
$ | 5 | $ | 19 | $ | 14 | |||||||||||
* | The number of contracts does not omit 000’s. |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Ø | At October 31, 2009, the sum of securities valued at $1,091 and cash of $442 collateralized the maximum delivery obligation of open put options written as follows: |
Unrealized | ||||||||||||||||
Issuer/ Exercise Price/ | Number of | Market | Premiums | Appreciation | ||||||||||||
Expiration Date | Contracts* | Value ╪ | Received | (Depreciation) | ||||||||||||
Amgen, Inc., $52.50, Dec, 2009 | 47 | $ | 10 | $ | 8 | $ | (2 | ) | ||||||||
Apollo Group, Inc., $50.00, Dec, 2009 | 43 | $ | 7 | $ | 5 | $ | (2 | ) | ||||||||
ConocoPhillips, $40.00, Nov, 2009 | 38 | $ | — | $ | 3 | $ | 3 | |||||||||
Dover Corp., $35.00, Nov, 2009 | 5 | $ | — | $ | — | $ | — | |||||||||
Ford Motor Co., $6.00, Nov, 2009 | 241 | $ | 3 | $ | 5 | $ | 2 | |||||||||
Hess Corp., $50.00, Nov, 2009 | 30 | $ | 2 | $ | 2 | $ | — | |||||||||
Lincoln National Corp. , $17.50, Nov, 2009 | 72 | $ | 1 | $ | 4 | $ | 3 | |||||||||
National Oilwell Varco, Inc., $35.00, Dec, 2009 | 41 | $ | 4 | $ | 3 | $ | (1 | ) | ||||||||
Qualcomm, Inc., $40.00, Nov, 2009 | 45 | $ | 4 | $ | 5 | $ | 1 | |||||||||
Texas Instruments, Inc., $21.00, Nov, 2009 | 75 | $ | 1 | $ | 2 | $ | 1 | |||||||||
$ | 32 | $ | 37 | $ | 5 | |||||||||||
* | The number of contracts does not omit 000’s. |
Unrealized | ||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||
S&P 500 Mini | 11 | Long | Dec 2009 | $ | (8 | ) | ||||||
* | The number of contracts does not omit 000’s. |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
6
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 166,663 | $ | 166,663 | $ | — | $ | — | ||||||||
Short-Term Investments | 321 | — | 321 | — | ||||||||||||
Total | $ | 166,984 | $ | 166,663 | $ | 321 | $ | — | ||||||||
Other Financial Instruments * | $ | 24 | $ | 24 | $ | — | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 13 | $ | 13 | $ | — | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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. |
7
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $165,035) | $ | 166,984 | ||
Cash | 492 | *† | ||
Receivables: | ||||
Investment securities sold | 2 | |||
Fund shares sold | 37 | |||
Dividends and interest | 228 | |||
Other assets | 49 | |||
Total assets | 167,792 | |||
Liabilities: | ||||
Bank overdraft — U.S. Dollars | — | |||
Payables: | ||||
Fund shares redeemed | 193 | |||
Investment management fees | 21 | |||
Distribution fees | 7 | |||
Variation margin | 16 | |||
Accrued expenses | 65 | |||
Written options (proceeds $56) | 37 | |||
Total liabilities | 339 | |||
Net assets | $ | 167,453 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 231,002 | |||
Accumulated undistributed net investment income | 1,777 | |||
Accumulated net realized loss on investments | (67,286 | ) | ||
Unrealized appreciation of investments | 1,960 | |||
Net assets | $ | 167,453 | ||
Shares authorized | 450,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 10.44/$11.05 | ||
Shares outstanding | 8,150 | |||
Net assets | $ | 85,080 | ||
Class B: Net asset value per share | $ | 9.89 | ||
Shares outstanding | 826 | |||
Net assets | $ | 8,165 | ||
Class C: Net asset value per share | $ | 9.84 | ||
Shares outstanding | 1,222 | |||
Net assets | $ | 12,025 | ||
Class R3: Net asset value per share | $ | 10.71 | ||
Shares outstanding | 2 | |||
Net assets | $ | 20 | ||
Class R4: Net asset value per share | $ | 10.68 | ||
Shares outstanding | 5 | |||
Net assets | $ | 55 | ||
Class R5: Net asset value per share | $ | 10.75 | ||
Shares outstanding | 1 | |||
Net assets | $ | 8 | ||
Class Y: Net asset value per share | $ | 10.76 | ||
Shares outstanding | 5,772 | |||
Net assets | $ | 62,100 | ||
* | Cash of $442 was designated to cover open put options written. | |
† | Cash of $50 was designated to cover open futures contracts. |
8
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 4,072 | ||
Interest | 31 | |||
Securities lending | — | |||
Total investment income | 4,103 | |||
Expenses: | ||||
Investment management fees | 1,265 | |||
Administrative services fees | — | |||
Transfer agent fees | 518 | |||
Distribution fees | ||||
Class A | 207 | |||
Class B | 94 | |||
Class C | 118 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 8 | |||
Accounting services fees | 27 | |||
Registration and filing fees | 72 | |||
Board of Directors’ fees | 6 | |||
Audit fees | 11 | |||
Other expenses | 51 | |||
Total expenses (before waivers and fees paid indirectly) | 2,377 | |||
Expense waivers | (259 | ) | ||
Transfer agent fee waivers | (204 | ) | ||
Commission recapture | (3 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (466 | ) | ||
Total expenses, net | 1,911 | |||
Net Investment Income | 2,192 | |||
Net Realized Loss on Investments and Other Financial Instruments: | ||||
Net realized loss on investments in securities | (33,845 | ) | ||
Net realized gain on futures | 393 | |||
Net realized gain on written options | 253 | |||
Net Realized Loss on Investments and Other Financial Instruments | (33,199 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments: | ||||
Net unrealized appreciation of investments | 51,440 | |||
Net unrealized depreciation of futures | (124 | ) | ||
Net unrealized appreciation of written options | 19 | |||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments | 51,335 | |||
Net Gain on Investments and Other Financial Instruments | 18,136 | |||
Net Increase in Net Assets Resulting from Operations | $ | 20,328 | ||
9
(000’s Omitted)
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 2,192 | $ | 1,270 | ||||
Net realized loss on investments and other financial instruments | (33,199 | ) | (23,436 | ) | ||||
Net unrealized appreciation (depreciation) of investments and other financial instruments | 51,335 | (97,417 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 20,328 | (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 | (16,001 | ) | (24,705 | ) | ||||
Class B | (4,603 | ) | (9,365 | ) | ||||
Class C | (2,799 | ) | (3,758 | ) | ||||
Class R3 | 9 | 6 | ||||||
Class R4 | 37 | 1 | ||||||
Class R5 | — | — | ||||||
Class Y | (14,268 | ) | (234 | ) | ||||
Net decrease from capital share transactions | (37,625 | ) | (38,055 | ) | ||||
Net Decrease In Net Assets | (18,637 | ) | (158,658 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 186,090 | 344,748 | ||||||
End of period | $ | 167,453 | $ | 186,090 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 1,777 | $ | 928 | ||||
10
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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
Notes to Financial Statements — (continued)
October 31, 2009
(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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Options contracts on securities, currencies, indices, futures contracts, commodities and other instruments shall be valued at their last reported sale 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 sale price at the Valuation Time on another exchange or market where it did trade. If it is not possible to determine the last reported sale price on the Primary Market or another 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. Absent both bid and asked prices on such exchange, the bid price may be used. | |||
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 and asked 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
12
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 Wellington Management Company, LLP (“Wellington”). 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
e) | 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 October 31, 2009. |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 of the Fund are declared and paid annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 October 31, 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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||||
Equity contracts | Summary of Net Assets — Unrealized depreciation | $ | 8 | |||||||||
Equity contracts | Written Options, Market Value | 37 |
14
The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the year ended October 31, 2009. | |||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Equity contracts | $ | 253 | $ | — | $ | 393 | $ | — | $ | — | $ | 646 | ||||||||||||
Total | $ | 253 | $ | — | $ | 393 | $ | — | $ | — | $ | 646 | ||||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Equity contracts | 19 | — | (124 | ) | — | — | $ | (105 | ) | |||||||||||||||
Total | $ | 19 | $ | — | $ | (124 | ) | $ | — | $ | — | $ | (105 | ) | ||||||||||
j) | 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 is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset 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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of October 31, 2009. | |||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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. |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. The Fund had no outstanding purchased option contracts as of October 31, 2009. Transactions involving written option contracts for the Fund during the year ended October 31, 2009, are summarized below: |
Options Contract Activity During the Year Ended October 31, 2009 | ||||||||
Call Options Written During the Period | Number of Contracts* | Premium Amounts | ||||||
Beginning of the period | — | $ | — | |||||
Written | 4,012 | 278 | ||||||
Expired | (2,678 | ) | (175 | ) | ||||
Closed | (843 | ) | (58 | ) | ||||
Exercised | (367 | ) | (26 | ) | ||||
End of Period | 124 | $ | 19 | |||||
Put Options Written During the Period | Number of Contracts* | Premium Amounts | ||||||
Beginning of the period | — | $ | — | |||||
Written | 3,374 | 178 | ||||||
Expired | (1,964 | ) | (103 | ) | ||||
Closed | (511 | ) | (28 | ) | ||||
Exercised | (262 | ) | (10 | ) | ||||
End of Period | 637 | $ | 37 | |||||
* | 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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
16
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 1,340 | $ | 1,020 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 1,777 | ||
Accumulated Capital Losses * | (66,943 | ) | ||
Unrealized Appreciation † | 1,617 | |||
Total Accumulated Deficit | $ | (63,549 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $3 and increase accumulated net realized gain on investments by $3. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2011 | $ | 10,424 | ||
2016 | 23,225 | |||
2017 | 33,294 | |||
Total | $ | 66,943 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
5. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 | % |
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 services 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 year ended October 31, 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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.17 | % | 1.40 | % | 1.40 | % | 1.39 | % | 1.38 | % | ||||||||||
Class B Shares | 1.60 | 1.94 | 2.08 | 2.07 | 2.13 | |||||||||||||||
Class C Shares | 2.03 | 2.12 | 2.09 | 2.09 | 2.10 | |||||||||||||||
Class R3 Shares | 1.38 | 1.65 | 1.65 | * | ||||||||||||||||
Class R4 Shares | 1.29 | 1.28 | 1.34 | * | ||||||||||||||||
Class R5 Shares | 0.95 | 0.99 | 1.05 | * | ||||||||||||||||
Class Y Shares | 0.86 | 0.88 | 0.88 | 0.88 | 0.89 |
* | From December 22, 2006 (commencement of operations), through October 31, 2007. |
18
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $90 and contingent deferred sales charges of $13 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $323 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
19
Notes to Financial Statements — (continued)
October 31, 2009
(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 | Affiliate for the | |||||||
the Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.08 | % | 13.78 | % | ||||
Class B | 0.08 | 13.05 | ||||||
Class C | 0.08 | 12.98 | ||||||
Class Y | 0.07 | 14.37 |
6. | Affiliate Holdings: | |
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 1 | |||
Class R4 | 1 | |||
Class R5 | 1 |
7. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 98,191 | ||
Sales Proceeds Excluding U.S. Government Obligations | 131,676 |
20
8. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 1,031 | 57 | (2,872 | ) | — | (1,784 | ) | 825 | 18 | (2,793 | ) | — | (1,950 | ) | ||||||||||||||||||||||||||
Amount | $ | 9,294 | $ | 494 | $ | (25,789 | ) | $ | — | $ | (16,001 | ) | $ | 10,605 | $ | 259 | $ | (35,569 | ) | $ | — | $ | (24,705 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 48 | — | (577 | ) | — | (529 | ) | 68 | — | (830 | ) | — | (762 | ) | ||||||||||||||||||||||||||
Amount | $ | 404 | $ | — | $ | (5,007 | ) | $ | — | $ | (4,603 | ) | $ | 825 | $ | — | $ | (10,190 | ) | $ | — | $ | (9,365 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 146 | — | (480 | ) | — | (334 | ) | 102 | — | (414 | ) | — | (312 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,238 | $ | — | $ | (4,037 | ) | $ | — | $ | (2,799 | ) | $ | 1,215 | $ | — | $ | (4,973 | ) | $ | — | $ | (3,758 | ) | ||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1 | — | — | — | 1 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 14 | $ | — | $ | (5 | ) | $ | — | $ | 9 | $ | 6 | $ | — | $ | — | $ | — | $ | 6 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 4 | — | — | — | 4 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 36 | $ | 1 | $ | — | $ | — | $ | 37 | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | ||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 714 | 93 | (2,089 | ) | — | (1,282 | ) | 665 | 51 | (860 | ) | — | (144 | ) | ||||||||||||||||||||||||||
Amount | $ | 5,895 | $ | 828 | $ | (20,991 | ) | $ | — | $ | (14,268 | ) | $ | 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) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 189 | $ | 1,726 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. | ||
11. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
21
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 9.31 | $ | 0.12 | $ | — | $ | 1.06 | $ | 1.18 | $ | (0.05 | ) | $ | — | $ | — | $ | (0.05 | ) | $ | 1.13 | $ | 10.44 | ||||||||||||||||||||
B | 8.80 | 0.08 | — | 1.01 | 1.09 | — | — | — | — | 1.09 | 9.89 | |||||||||||||||||||||||||||||||||
C | 8.80 | 0.04 | — | 1.00 | 1.04 | — | — | — | — | 1.04 | 9.84 | |||||||||||||||||||||||||||||||||
R3 | 9.56 | 0.09 | — | 1.11 | 1.20 | (0.05 | ) | — | — | (0.05 | ) | 1.15 | 10.71 | |||||||||||||||||||||||||||||||
R4 | 9.60 | 0.10 | — | 1.09 | 1.19 | (0.11 | ) | — | — | (0.11 | ) | 1.08 | 10.68 | |||||||||||||||||||||||||||||||
R5 | 9.62 | 0.14 | — | 1.10 | 1.24 | (0.11 | ) | — | — | (0.11 | ) | 1.13 | 10.75 | |||||||||||||||||||||||||||||||
Y | 9.64 | 0.15 | — | 1.09 | 1.24 | (0.12 | ) | — | — | (0.12 | ) | 1.12 | 10.76 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 14.91 | 0.05 | — | (5.63 | ) | (5.58 | ) | (0.02 | ) | — | — | (0.02 | ) | (5.60 | ) | 9.31 | ||||||||||||||||||||||||||||
B | 14.16 | (0.05 | ) | — | (5.31 | ) | (5.36 | ) | — | — | — | — | (5.36 | ) | 8.80 | |||||||||||||||||||||||||||||
C | 14.17 | (0.06 | ) | — | (5.31 | ) | (5.37 | ) | — | — | — | — | (5.37 | ) | 8.80 | |||||||||||||||||||||||||||||
R3 | 15.33 | 0.01 | — | (5.78 | ) | (5.77 | ) | — | — | — | — | (5.77 | ) | 9.56 | ||||||||||||||||||||||||||||||
R4 | 15.37 | 0.06 | — | (5.79 | ) | (5.73 | ) | (0.04 | ) | — | — | (0.04 | ) | (5.77 | ) | 9.60 | ||||||||||||||||||||||||||||
R5 | 15.41 | 0.10 | — | (5.81 | ) | (5.71 | ) | (0.08 | ) | — | — | (0.08 | ) | (5.79 | ) | 9.62 | ||||||||||||||||||||||||||||
Y | 15.43 | 0.12 | — | (5.81 | ) | (5.69 | ) | (0.10 | ) | — | — | (0.10 | ) | (5.79 | ) | 9.64 | ||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
B | 12.53 | (0.07 | ) | 0.01 | 1.70 | 1.64 | (0.01 | ) | — | — | (0.01 | ) | 1.63 | 14.16 | ||||||||||||||||||||||||||||||
C | 12.54 | (0.07 | ) | 0.01 | 1.70 | 1.64 | (0.01 | ) | — | — | (0.01 | ) | 1.63 | 14.17 | ||||||||||||||||||||||||||||||
R3(g) | 13.89 | — | — | 1.44 | 1.44 | — | — | — | — | 1.44 | 15.33 | |||||||||||||||||||||||||||||||||
R4(g) | 13.89 | 0.03 | — | 1.45 | 1.48 | — | — | — | — | 1.48 | 15.37 | |||||||||||||||||||||||||||||||||
R5(g) | 13.89 | 0.07 | — | 1.45 | 1.52 | — | — | — | — | 1.52 | 15.41 | |||||||||||||||||||||||||||||||||
Y | 13.58 | 0.19 | 0.01 | 1.75 | 1.95 | (0.10 | ) | — | — | (0.10 | ) | 1.85 | 15.43 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 11.78 | 0.04 | — | 1.39 | 1.43 | (0.02 | ) | — | — | (0.02 | ) | 1.41 | 13.19 | |||||||||||||||||||||||||||||||
B | 11.25 | (0.03 | ) | — | 1.31 | 1.28 | — | — | — | — | 1.28 | 12.53 | ||||||||||||||||||||||||||||||||
C | 11.26 | (0.04 | ) | — | 1.32 | 1.28 | — | — | — | — | 1.28 | 12.54 | ||||||||||||||||||||||||||||||||
Y | 12.12 | 0.14 | — | 1.40 | 1.54 | (0.08 | ) | — | — | (0.08 | ) | 1.46 | 13.58 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.67 | 0.10 | — | 1.09 | 1.19 | (0.08 | ) | — | — | (0.08 | ) | 1.11 | 11.78 | |||||||||||||||||||||||||||||||
B | 10.20 | (0.02 | ) | — | 1.08 | 1.06 | (0.01 | ) | — | — | (0.01 | ) | 1.05 | 11.25 | ||||||||||||||||||||||||||||||
C | 10.22 | (0.02 | ) | — | 1.07 | 1.05 | (0.01 | ) | — | — | (0.01 | ) | 1.04 | 11.26 | ||||||||||||||||||||||||||||||
Y | 10.99 | 0.15 | — | 1.12 | 1.27 | (0.14 | ) | — | — | (0.14 | ) | 1.13 | 12.12 |
(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) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Not annualized. | |
(i) | Annualized. |
22
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net | |||||||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio | |||||||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Turnover Rate(d) | ||||||||||||||||||||||||||
12.82 | % | $ | 85,080 | 1.58 | % | 1.17 | % | 1.17 | % | 1.27 | % | 59 | % | |||||||||||||||||||
12.39 | 8,165 | 2.65 | 1.60 | 1.60 | 0.86 | — | ||||||||||||||||||||||||||
11.82 | 12,025 | 2.22 | 2.03 | 2.03 | 0.41 | — | ||||||||||||||||||||||||||
12.65 | 20 | 2.04 | 1.38 | 1.38 | 0.98 | — | ||||||||||||||||||||||||||
12.65 | 55 | 1.29 | 1.29 | 1.29 | 1.09 | — | ||||||||||||||||||||||||||
13.12 | 8 | 0.95 | 0.95 | 0.95 | 1.47 | — | ||||||||||||||||||||||||||
13.13 | 62,100 | 0.86 | 0.86 | 0.86 | 1.57 | — | ||||||||||||||||||||||||||
(37.46 | ) | 92,476 | 1.44 | 1.40 | 1.40 | 0.36 | 69 | |||||||||||||||||||||||||
(37.85 | ) | 11,931 | 2.39 | 1.95 | 1.95 | (0.18 | ) | — | ||||||||||||||||||||||||
(37.90 | ) | 13,691 | 2.13 | 2.13 | 2.13 | (0.36 | ) | — | ||||||||||||||||||||||||
(37.64 | ) | 11 | 1.87 | 1.65 | 1.65 | 0.12 | — | |||||||||||||||||||||||||
(37.37 | ) | 8 | 1.28 | 1.28 | 1.28 | 0.48 | — | |||||||||||||||||||||||||
(37.23 | ) | 7 | 0.99 | 0.99 | 0.99 | 0.77 | — | |||||||||||||||||||||||||
(37.09 | ) | 67,966 | 0.89 | 0.89 | 0.89 | 0.88 | — | |||||||||||||||||||||||||
13.87 | (f) | 177,170 | 1.40 | 1.40 | 1.40 | 0.32 | 72 | |||||||||||||||||||||||||
13.14 | (f) | 29,968 | 2.31 | 2.08 | 2.08 | (0.35 | ) | — | ||||||||||||||||||||||||
13.07 | (f) | 26,479 | 2.09 | 2.09 | 2.09 | (0.37 | ) | — | ||||||||||||||||||||||||
10.37 | (h) | 11 | 1.65 | (i) | 1.65 | (i) | 1.65 | (i) | (0.03 | )(i) | — | |||||||||||||||||||||
10.66 | (h) | 11 | 1.34 | (i) | 1.34 | (i) | 1.34 | (i) | 0.28 | (i) | — | |||||||||||||||||||||
10.94 | (h) | 11 | 1.05 | (i) | 1.05 | (i) | 1.05 | (i) | 0.57 | (i) | — | |||||||||||||||||||||
14.45 | (f) | 111,098 | 0.88 | 0.88 | 0.88 | 0.86 | — | |||||||||||||||||||||||||
12.13 | 189,375 | 1.40 | 1.40 | 1.40 | 0.39 | 67 | ||||||||||||||||||||||||||
11.38 | 35,673 | 2.30 | 2.07 | 2.07 | (0.28 | ) | — | |||||||||||||||||||||||||
11.37 | 29,153 | 2.10 | 2.10 | 2.10 | (0.31 | ) | — | |||||||||||||||||||||||||
12.76 | 169,614 | 0.89 | 0.89 | 0.89 | 0.88 | — | ||||||||||||||||||||||||||
11.19 | 209,721 | 1.41 | 1.40 | 1.40 | 0.81 | 61 | ||||||||||||||||||||||||||
10.35 | 39,806 | 2.34 | 2.15 | 2.15 | 0.06 | — | ||||||||||||||||||||||||||
10.29 | 33,690 | 2.11 | 2.11 | 2.11 | 0.12 | — | ||||||||||||||||||||||||||
11.62 | 81,582 | 0.90 | 0.90 | 0.90 | 0.97 | — |
23
The Hartford Mutual Funds, Inc.
December 15, 2009
24
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
26
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 from 2005 – 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 – 2009. |
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
27
DRD* | 100.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.053 | N/A | N/A | 0.053 | ||||||||||||
Class R3 | 0.049 | N/A | N/A | 0.049 | ||||||||||||
Class R4 | 0.112 | N/A | N/A | 0.112 | ||||||||||||
Class R5 | 0.109 | N/A | N/A | 0.109 | ||||||||||||
Class Y | 0.120 | N/A | N/A | 0.120 |
28
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,183.70 | $ | 6.55 | $ | 1,000.00 | $ | 1,019.21 | $ | 6.06 | 1.19 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,181.60 | $ | 9.18 | $ | 1,000.00 | $ | 1,016.79 | $ | 8.49 | 1.67 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,178.40 | $ | 11.26 | $ | 1,000.00 | $ | 1,014.87 | $ | 10.41 | 2.05 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,184.70 | $ | 7.05 | $ | 1,000.00 | $ | 1,018.75 | $ | 6.51 | 1.28 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,182.70 | $ | 7.04 | $ | 1,000.00 | $ | 1,018.75 | $ | 6.51 | 1.28 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,185.20 | $ | 5.01 | $ | 1,000.00 | $ | 1,020.62 | $ | 4.63 | 0.91 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,186.30 | $ | 4.57 | $ | 1,000.00 | $ | 1,021.02 | $ | 4.23 | 0.83 | 184 | 365 |
29
30
31
32
33
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
13 | ||||
14 | ||||
15 | ||||
16 | ||||
17 | ||||
28 | ||||
30 | ||||
31 | ||||
33 | ||||
33 | ||||
34 | ||||
35 | ||||
36 |
(subadvised by Wellington Management Company, LLP) | Investment objective — Seeks long-term capital appreciation. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
Diversified International A# | 25.40 | % | -20.38 | % | ||||
Diversified International A## | 18.50 | % | -23.68 | % | ||||
Diversified International B# | 24.53 | % | -20.89 | % | ||||
Diversified International B## | 19.53 | % | -23.27 | % | ||||
Diversified International C# | 24.53 | % | -20.89 | % | ||||
Diversified International C## | 23.53 | % | -20.89 | % | ||||
Diversified International I# | 25.84 | % | -20.07 | % | ||||
Diversified International R3# | 25.05 | % | -20.55 | % | ||||
Diversified International R4# | 25.43 | % | -20.36 | % | ||||
Diversified International R5# | 25.60 | % | -20.18 | % | ||||
Diversified International Y# | 25.86 | % | -20.06 | % | ||||
MSCI All Country World ex U.S. Index | 34.79 | % | -13.67 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
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
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 3.8 | % | ||
Banks (Financials) | 11.9 | |||
Capital Goods (Industrials) | 7.9 | |||
Commercial & Professional Services (Industrials) | 0.7 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 1.8 | |||
Consumer Services (Consumer Discretionary) | 0.8 | |||
Diversified Financials (Financials) | 4.2 | |||
Energy (Energy) | 9.1 | |||
Food & Staples Retailing (Consumer Staples) | 1.3 | |||
Food, Beverage & Tobacco (Consumer Staples) | 6.8 | |||
Health Care Equipment & Services (Health Care) | 0.7 | |||
Household & Personal Products (Consumer Staples) | 1.1 | |||
Insurance (Financials) | 3.6 | |||
Materials (Materials) | 11.0 | |||
Media (Consumer Discretionary) | 0.3 | |||
Other Investment Pools and Funds (Financials) | 0.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 6.7 | |||
Real Estate (Financials) | 2.3 | |||
Retailing (Consumer Discretionary) | 3.1 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 2.1 | |||
Software & Services (Information Technology) | 2.3 | |||
Technology Hardware & Equipment (Information Technology) | 2.8 | |||
Telecommunication Services (Services) | 4.9 | |||
Transportation (Industrials) | 2.7 | |||
Utilities (Utilities) | 4.3 | |||
Short-Term Investments | 2.3 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
3
as of October 31, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 1.5 | % | ||
Austria | 0.5 | |||
Belgium | 1.4 | |||
Brazil | 3.5 | |||
Canada | 3.6 | |||
China | 2.1 | |||
Denmark | 0.6 | |||
Egypt | 0.2 | |||
Finland | 0.2 | |||
France | 7.6 | |||
Gabon | 0.0 | |||
Germany | 7.3 | |||
Greece | 0.3 | |||
Hong Kong | 3.7 | |||
Hungary | 0.0 | |||
India | 2.3 | |||
Indonesia | 0.2 | |||
Ireland | 1.0 | |||
Israel | 0.6 | |||
Italy | 2.5 | |||
Japan | 11.4 | |||
Jersey | 0.1 | |||
Luxembourg | 0.3 | |||
Malaysia | 0.2 | |||
Mexico | 0.2 | |||
Netherlands | 3.9 | |||
New Zealand | 0.0 | |||
Norway | 0.2 | |||
Peru | 0.1 | |||
Philippines | 0.0 | |||
Poland | 0.1 | |||
Portugal | 0.0 | |||
Russia | 2.0 | |||
Singapore | 0.5 | |||
South Africa | 1.5 | |||
South Korea | 0.9 | |||
Spain | 4.1 | |||
Sweden | 0.9 | |||
Switzerland | 7.8 | |||
Taiwan | 2.3 | |||
Thailand | 0.4 | |||
Turkey | 0.4 | |||
United Kingdom | 18.8 | |||
United States | 1.9 | |||
Short-Term Investments | 2.3 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
4
October 31, 2009
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 96.2% | ||||||||
Australia — 1.5% | ||||||||
5 | ABC Learning Centres Ltd. ⌂•† | $ | — | |||||
1 | Aditya Birla Minerals Ltd. | 2 | ||||||
3 | AWB Ltd. | 3 | ||||||
9 | Beach Petroleum Ltd. | 7 | ||||||
1 | Biota Holdings Ltd. • | 4 | ||||||
9 | Centamin Egypt Ltd. • | 19 | ||||||
1 | Challenger Financial Services Group Ltd. | 3 | ||||||
1 | Coffey International Ltd. | 2 | ||||||
8 | Emeco Holdings Ltd. | 6 | ||||||
9 | Foster’s Group Ltd. | 43 | ||||||
3 | Hastie Group Ltd. | 4 | ||||||
2 | iiNET Ltd. | 3 | ||||||
2 | IMF Australia Ltd. | 3 | ||||||
10 | iSOFT Group Ltd. | 7 | ||||||
11 | Karoon Gas Australia Ltd. • | 73 | ||||||
1 | Macquarie Media Group Ltd. | 2 | ||||||
18 | Pacific Brands Ltd. | 21 | ||||||
4 | Paladin Energy Ltd. • | 16 | ||||||
6 | Pan Pacific Petroleum | 2 | ||||||
3 | Panoramic Resources Ltd. | 6 | ||||||
7 | PMP Ltd. | 4 | ||||||
1 | Premier Investments Ltd. | 5 | ||||||
15 | Sigma Pharmaceuticals Ltd. | 12 | ||||||
2 | Straits Resources Ltd. | 3 | ||||||
6 | STW Communications Group Ltd. | 4 | ||||||
5 | Toll Holdings Ltd. | 41 | ||||||
— | Transfield Services Ltd. | — | ||||||
2 | Woolworths Ltd. | 56 | ||||||
351 | ||||||||
Austria — 0.5% | ||||||||
— | BWIN Interactive Entertainment • | 10 | ||||||
— | Conwert Immobilien Invest SE | 4 | ||||||
2 | OMV AG | 86 | ||||||
— | Semperit AG Holding | 2 | ||||||
2 | WDS Ltd. | 3 | ||||||
105 | ||||||||
Belgium — 1.4% | ||||||||
1 | Delhaize-Le Lion S.A. | 44 | ||||||
— | D’ieteren S.A. | 9 | ||||||
— | Financiere De Tubize S.A. | 3 | ||||||
20 | Fortis | 86 | ||||||
14 | Hansen Transmissions • | 29 | ||||||
— | Kinepolis | 3 | ||||||
— | Nyrstar N.V. | 5 | ||||||
— | Tessenderlo Chemie N.V. | 6 | ||||||
3 | UCB S.A. | 134 | ||||||
— | Umicore | 11 | ||||||
— | Wereldhave Belgium | 2 | ||||||
332 | ||||||||
Brazil — 3.5% | ||||||||
6 | Banco do Estado do Rio Grande do Sul S.A. | 35 | ||||||
2 | BM & F Bovespa S.A. | 12 | ||||||
1 | BR Malls Participacoes S.A. • | 15 | ||||||
1 | Cetip S.A. — Balcao Organizado | 5 | ||||||
2 | Cia Brasileira de Meios de Pagamentos | 16 | ||||||
3 | Companhia Energetica de Minas Gerais | 45 | ||||||
9 | Companhia Energetica de Minas Gerais ADR | 148 | ||||||
1 | Cyrela Brazil Realty S.A. | 13 | ||||||
2 | Hypermarcas S.A. • | 30 | ||||||
11 | Itau Unibanco Banco Multiplo S.A. ADR | 211 | ||||||
1 | Lojas Renner S.A. | 12 | ||||||
2 | Perdigao S.A. • | 39 | ||||||
2 | Petroleo Brasileiro S.A. ADR | 72 | ||||||
1 | Tam S.A. • | 10 | ||||||
2 | Tele Norte Leste Participacoes S.A. ADR | 29 | ||||||
1 | Usinas Siderurgicas De Minas Gerais S.A. | 14 | ||||||
1 | Vale S.A. — SP ADR | 27 | ||||||
— | Vivo Participacoes S.A. | 8 | ||||||
741 | ||||||||
Canada — 3.6% | ||||||||
— | AGF Management Ltd. | 6 | ||||||
1 | Agnico Eagle Mines Ltd. | 32 | ||||||
1 | Agrium U.S., Inc. | 56 | ||||||
1 | Agrium, Inc. | 23 | ||||||
— | Alimentation Couche-Tard, Inc. Class B | 8 | ||||||
— | Artis Real Estate Investment Trust | 3 | ||||||
— | Atrium Innovations, Inc. • | 3 | ||||||
3 | Barrick Gold Corp. | 97 | ||||||
1 | Cameco Corp. | 19 | ||||||
— | Canaccord Capital, Inc. | 3 | ||||||
1 | Canadian Natural Resources Ltd. | 39 | ||||||
— | Canadian Western Bank | 6 | ||||||
— | Canam Group, Inc. | 3 | ||||||
1 | Capstone Mining Corp. • | 2 | ||||||
1 | Cascades, Inc. | 8 | ||||||
1 | Celestica, Inc. • | 8 | ||||||
1 | Centerra Gold, Inc. • | 5 | ||||||
— | Constellation Software, Inc. | 4 | ||||||
— | Dundee Real Estate Investment Trust | 7 | ||||||
— | DundeeWealth, Inc. | 6 | ||||||
— | E-L Financial Corp. Ltd. | 4 | ||||||
— | Equitable Group, Inc. | 7 | ||||||
— | Flint Energy Services Ltd. • | 3 | ||||||
— | Garda World Security Co. • | 3 | ||||||
1 | Gennum Corp. | 4 | ||||||
— | Grande Cache Coal Corp. • | 2 | ||||||
18 | High River Gold Mines Ltd. • | 7 | ||||||
— | Home Capital Group, Inc. | 13 | ||||||
— | Hudbay Minerals, Inc. • | 5 | ||||||
1 | InnVest Real Estate Investment Trust | 3 | ||||||
3 | Ivanhoe Mines Ltd. • | 28 | ||||||
— | Just Energy Income Fund | 5 | ||||||
1 | Kinross Gold Corp. | 9 | ||||||
— | Laurentian Bank of Canada | 11 | ||||||
— | Linamar Corp. | 2 | ||||||
1 | Lundin Mining Corp. • | 3 | ||||||
— | MOSAID Technologies, Inc. | 2 | ||||||
— | Newalta, Inc. | 4 | ||||||
3 | Northgate Minerals Corp. • | 7 | ||||||
1 | Pacific Rubiales Energy Corp. • | 9 | ||||||
1 | Pinetree Capital Ltd. • | 1 | ||||||
1 | Potash Corp. of Saskatchewan, Inc. | 106 | ||||||
1 | Potash Corp. of Saskatchewan, Inc. ADR | 65 | ||||||
— | Primaris Retail Real Estate Investment Trust | 4 | ||||||
— | ShawCor Ltd. | 8 | ||||||
3 | Sino Forest Corp. • | 41 | ||||||
1 | Suncor Energy, Inc. | 43 | ||||||
1 | Teck Cominco Ltd. Class B | 42 | ||||||
— | The Churchill Corp. • | 6 | ||||||
1 | Thompson Creek Metals Co., Inc • | 6 |
5
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 96.2% — (continued) | ||||||||
Canada — 3.6% — (continued) | ||||||||
1 | Total Energy Services | $ | 2 | |||||
2 | West Energy Ltd. • | 5 | ||||||
1 | Western Coal Corp. • | 2 | ||||||
— | Winpak Ltd. | 3 | ||||||
803 | ||||||||
China — 2.1% | ||||||||
— | Baidu, Inc. ADR • | 42 | ||||||
18 | China Construction Bank | 15 | ||||||
4 | China Life Insurance Co., Ltd. | 18 | ||||||
— | China Petroleum & Chemical Corp. ADR | 15 | ||||||
10 | China Shenhua Energy Co., Ltd. | 47 | ||||||
8 | China Shipping Development | 11 | ||||||
18 | Dongfeng Motor Group Co., Ltd. | 21 | ||||||
11 | Golden Eagle Retail Group Ltd. | 19 | ||||||
20 | Industrial and Commercial Bank of China | 16 | ||||||
34 | Jiangsu Express Co., Ltd. | 30 | ||||||
8 | Parkson Retail Group Ltd. | 13 | ||||||
69 | PetroChina Co., Ltd. | 83 | ||||||
4 | Tencent Holdings Ltd. | 64 | ||||||
4 | ZTE Corp. | 20 | ||||||
414 | ||||||||
Denmark — 0.6% | ||||||||
1 | DSV A/S | 22 | ||||||
2 | Vestas Wind Systems A/S • | 108 | ||||||
130 | ||||||||
Egypt — 0.2% | ||||||||
2 | Egyptian Financial Group | 11 | ||||||
— | Orascom Construction | 22 | ||||||
33 | ||||||||
Finland — 0.2% | ||||||||
— | Oriola-KD Oyj | 2 | ||||||
1 | Raisio plc | 5 | ||||||
1 | Sponda Oyj • | 5 | ||||||
1 | Tietoenator Oyj • | 10 | ||||||
1 | Yit Oyj | 12 | ||||||
34 | ||||||||
France — 7.6% | ||||||||
1 | Accor S.A. | 42 | ||||||
24 | Alcatel S.A. | 88 | ||||||
— | Arkema | 7 | ||||||
1 | BNP Paribas | 64 | ||||||
— | Boiron | 10 | ||||||
— | Bollore | 19 | ||||||
— | Cegereal | 3 | ||||||
— | Cie Generale d’Optique Essilor International S.A. | 21 | ||||||
— | Credit Industriel et Commercial | 7 | ||||||
— | Eiffage | 4 | ||||||
1 | Electricite de France | 44 | ||||||
— | Esso Ste. Anonyme Francaise | 3 | ||||||
— | Euro Disney S.C.A. • | 2 | ||||||
— | Fonciere des Murs | 3 | ||||||
— | Fonciere des Regions | 6 | ||||||
2 | Gaz de France | 71 | ||||||
— | Gecina S.A. | 3 | ||||||
3 | Groupe Danone | 174 | ||||||
1 | Groupe Eurotunnel S.A. | 9 | ||||||
— | Meetic • | 4 | ||||||
2 | Michelin (C.G.D.E.) Class B | 139 | ||||||
— | Nexans S.A. | 9 | ||||||
— | Nexity | 13 | ||||||
— | Peugeot S.A. | 12 | ||||||
1 | Pinault-Printemps-Redoute S.A. | 109 | ||||||
— | Rallye S.A. | 5 | ||||||
1 | Renault S.A. | 46 | ||||||
3 | Rhodia S.A. | 42 | ||||||
1 | Safran S.A. | 9 | ||||||
1 | Sanofi-Aventis S.A. | 90 | ||||||
— | Sartorius Stedium Biotech | 4 | ||||||
1 | Schneider Electric S.A. | 74 | ||||||
1 | Scor SE | 13 | ||||||
— | SEB S.A. | 16 | ||||||
— | Sequana | 3 | ||||||
— | Societe BiC S.A. | 9 | ||||||
— | Societe Fonciere, Financiere et de Participations | 4 | ||||||
2 | Societe Generale Class A | 110 | ||||||
— | Technip S.A. | 2 | ||||||
3 | UbiSoft Entertainment S.A. • | 48 | ||||||
1 | Unibail-Rodamco SE | 163 | ||||||
— | Valeo S.A. | 4 | ||||||
— | Vallourec | 46 | ||||||
1 | Vinci S.A. | 36 | ||||||
1,590 | ||||||||
Gabon — 0.0% | ||||||||
— | Total Gabon | 4 | ||||||
Germany — 7.3% | ||||||||
— | Aareal Bank AG | 6 | ||||||
1 | Adidas-Salomon AG | 38 | ||||||
— | Allianz SE | 41 | ||||||
— | Alstria Office REIT AG | 5 | ||||||
1 | BASF SE | 56 | ||||||
— | Biotest AG | 3 | ||||||
— | CeWe Color Holdings | 2 | ||||||
6 | Daimler AG | 287 | ||||||
1 | Deutsche Boerse AG | 89 | ||||||
1 | Deutsche Lufthansa AG | 18 | ||||||
2 | Deutsche Post AG | 40 | ||||||
— | DIC Asset AG | 3 | ||||||
— | Draegerwerk AG & Co. | 2 | ||||||
— | Drillisch AG | 2 | ||||||
3 | E.On AG | 129 | ||||||
— | Fresenius SE | 12 | ||||||
1 | GEA Group AG | 14 | ||||||
— | GFK SE | 3 | ||||||
— | Hannover Rueckversicherung AG | 17 | ||||||
2 | HeidelbergCement AG | 104 | ||||||
1 | Hochtief AG | 65 | ||||||
2 | Infineon Technologies AG • | 11 | ||||||
1 | K+S AG | 29 | ||||||
— | Linde AG | 32 | ||||||
— | Loewe AG | 1 | ||||||
1 | Metro AG | 78 | ||||||
— | MTU Aero Engines Holdings AG | 13 | ||||||
— | Muenchener Rueckversicherungs NPV | 61 | ||||||
— | Rheinmetall AG | 4 | ||||||
— | Salzgitter AG | 42 |
6
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 96.2% — (continued) | ||||||||
Germany — 7.3% — (continued) | ||||||||
3 | Siemens AG | $ | 305 | |||||
— | Software AG | 2 | ||||||
1 | Suedzucker AG | 11 | ||||||
— | TIPP24 AG | 3 | ||||||
1 | Wirecard | 9 | ||||||
1,537 | ||||||||
Greece — 0.3% | ||||||||
1 | Alpha Bank A.E. | 23 | ||||||
— | Babis Vovos International Construction | 3 | ||||||
— | Folli-Follie S.A. | 3 | ||||||
2 | Public Power Corp. | 45 | ||||||
74 | ||||||||
Hong Kong — 3.7% | ||||||||
31 | Anta Sports Products Ltd. | 37 | ||||||
6 | ASM Pacific Technology | 46 | ||||||
54 | BOC Hong Kong Holdings Ltd. | 124 | ||||||
46 | Champion Technology Holdings Ltd. | 2 | ||||||
2 | China Mobile Ltd. | 19 | ||||||
19 | China Shanshui Cement Group | 14 | ||||||
3 | Chow Sang Sang Holdings | 3 | ||||||
7 | Cosco Pacific Ltd. | 9 | ||||||
6 | Dah Chong Hong Holdings Ltd. | 3 | ||||||
9 | Esprit Holdings Ltd. | 58 | ||||||
8 | Geely Automobile Holdings Ltd. | 3 | ||||||
2 | Great Eagle Holdings Ltd. | 6 | ||||||
5 | Hengan International Group Co., Ltd. | 32 | ||||||
1 | Hong Kong Exchanges & Clearing Ltd. | 9 | ||||||
3 | Hopson Development Holdings Ltd. | 6 | ||||||
80 | Huabao International Holdings Ltd. | 77 | ||||||
25 | Hutchison Telecommunications International Ltd. | 5 | ||||||
3 | Hysan Development Co., Ltd. | 8 | ||||||
9 | K Wah International Holdings Ltd. | 3 | ||||||
21 | Li & Fung Ltd. | 86 | ||||||
4 | Lilang China Co., Ltd. • | 2 | ||||||
8 | New World China Land Ltd. | 3 | ||||||
4 | New World China Land Ltd. — Rights | — | ||||||
9 | Noble Group Ltd. | 16 | ||||||
19 | Pacific Andes International Holdings Ltd. | 3 | ||||||
1 | RCG Holdings Ltd. | 2 | ||||||
6 | Shangri-La Asia Ltd. | 12 | ||||||
22 | Sinolink Worldwide Holdings | 4 | ||||||
21 | Skyworth Digital Holdings Ltd. | 12 | ||||||
7 | Sun Hung Kai Properties Ltd. | 112 | ||||||
7 | Varitronix International Ltd. | 2 | ||||||
18 | Wynn Macau Ltd. • | 24 | ||||||
12 | Xinao Gas Holdings Ltd. | 26 | ||||||
768 | ||||||||
Hungary — 0.0% | ||||||||
— | Gedeon Richter plc | 9 | ||||||
India — 2.3% | ||||||||
5 | Dabur India Ltd. | 16 | ||||||
1 | Educomp Solutions Ltd. | 10 | ||||||
1 | HDFC Bank Ltd. ADR | 123 | ||||||
— | ICICI Bank Ltd. | 6 | ||||||
1 | Indiabulls Real Estate Ltd. | 7 | ||||||
3 | Infrastructure Development Finance Co., Ltd. | 9 | ||||||
1 | Lanco Infratech Ltd. • | 6 | ||||||
1 | Piramal Healthcare Ltd. | 12 | ||||||
3 | Reliance Industries Ltd. | 141 | ||||||
1 | Reliance Industries Ltd. GDR ■ | 61 | ||||||
1 | Sterlite Industries India Ltd. | 9 | ||||||
1 | Tata Consultancy Services | 12 | ||||||
1 | Tata Motors Ltd. | 10 | ||||||
— | United Spirits Ltd. | 10 | ||||||
432 | ||||||||
Indonesia — 0.2% | ||||||||
37 | Bank Mandiri TBK | 18 | ||||||
120 | Bumi Resources TBK PT | 29 | ||||||
47 | ||||||||
Ireland — 1.0% | ||||||||
3 | Allied Irish Banks plc • | 8 | ||||||
1 | CRH plc | 34 | ||||||
1 | DCC plc | 19 | ||||||
7 | Elan Corp. plc ADR • | 40 | ||||||
4 | Experian plc | 40 | ||||||
1 | Genesis Lease Ltd. ADR | 7 | ||||||
1 | Greencore Group plc | 2 | ||||||
1 | Irish Life & Permanent plc | 5 | ||||||
3 | Ryanair Holdings plc ADR • | 72 | ||||||
— | SkillSoft plc ADR • | 5 | ||||||
1 | Smurfit Kappa Group plc | 7 | ||||||
5 | Total Produce plc | 2 | ||||||
2 | United Drug plc | 6 | ||||||
247 | ||||||||
Israel — 0.6% | ||||||||
6 | Bezeq Israeli Telecommunication Corp., Ltd. | 12 | ||||||
2 | Teva Pharmaceutical Industries Ltd. ADR | 106 | ||||||
118 | ||||||||
Italy — 2.5% | ||||||||
— | Amplifon S.p.A. | 2 | ||||||
— | Ansaldo STS S.p.A. | 8 | ||||||
1 | Autostrada Torino-Milano S.p.A. | 8 | ||||||
2 | Banco di Desio e della Brianza S.A. | 14 | ||||||
5 | Bulgari S.p.A. | 44 | ||||||
1 | Buzzi Unicem S.p.A. | 10 | ||||||
2 | Eni S.p.A. | 42 | ||||||
— | Esprinet S.p.A. | 2 | ||||||
1 | Finmeccanica S.p.A. | 15 | ||||||
44 | Intesa Sanpaolo | 184 | ||||||
6 | Iride S.p.A. | 11 | ||||||
— | Italcementi S.p.A. | 7 | ||||||
4 | Parmalat S.p.A. | 12 | ||||||
12 | Saras S.p.A. | 38 | ||||||
15 | Seat Pagine Gialle | 4 | ||||||
1 | Sias S.p.A. | 11 | ||||||
70 | Telecom Italia S.p.A. | 77 | ||||||
489 | ||||||||
Japan — 11.4% | ||||||||
— | Accordia Golf Co., Ltd. | 2 | ||||||
— | Ahresty Corp. | 3 | ||||||
— | Aichi Bank Ltd. | 7 | ||||||
1 | Aichi Machine Industry Co., Ltd. | 2 | ||||||
— | Aisan Industry Co., Ltd. | 4 | ||||||
1 | Aloka Co., Ltd. | 4 | ||||||
— | Alpen Co. | 3 | ||||||
— | Alpine Electronics, Inc. | 3 | ||||||
— | Aoki Holdings, Inc. | 2 | ||||||
1 | Aoyama Trading Co., Ltd. | 10 |
7
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 96.2% — (continued) | ||||||||
Japan — 11.4% — (continued) | ||||||||
— | Arcs Co., Ltd. | $ | 5 | |||||
1 | Arisawa Manufacturing Co., Ltd. | 4 | ||||||
1 | Arnest One Corp. | 7 | ||||||
— | Canon Finetech, Inc. | 5 | ||||||
1 | Canon, Inc. | 53 | ||||||
— | Cawachi Ltd. | 4 | ||||||
— | Century Tokyo Leasing Corp. | 2 | ||||||
— | Chiyoda Co., Ltd. | 4 | ||||||
— | Chudenko Corp. | 6 | ||||||
1 | Circle K Sunkus Co., Ltd. | 16 | ||||||
— | CMK Corp. | 2 | ||||||
— | DA Office Investment Corp. | 8 | ||||||
6 | Daiichi Sankyo Co., Ltd. | 117 | ||||||
1 | Daiichikosho Co., Ltd. | 8 | ||||||
1 | DCM Japan Holdings Co., Ltd. | 9 | ||||||
— | DTS Corp. | 2 | ||||||
1 | East Japan Railway Co. | 39 | ||||||
— | Edion Corp. | 4 | ||||||
4 | Eisai Co., Ltd. | 124 | ||||||
— | Fields Corp. | 4 | ||||||
— | Fuji Machine Manufacturing Co. | 4 | ||||||
1 | Futaba Corp. | 14 | ||||||
1 | Godo Steel Ltd. | 3 | ||||||
— | H.I.S. Co., Ltd. | 2 | ||||||
1 | Heiwa Corp. | 10 | ||||||
— | Hikari Tsushin, Inc. | 5 | ||||||
12 | Hino Motors Ltd. | 44 | ||||||
— | Hitachi Information Systems Ltd. | 4 | ||||||
— | Hitachi Medical Corp. | 5 | ||||||
1 | Hogy Medical Co., Ltd. | 38 | ||||||
8 | Honda Motor Co., Ltd. | 241 | ||||||
— | Hosiden Corp. | 3 | ||||||
— | INES Corp. | 3 | ||||||
1 | Izumiya Co., Ltd. | 6 | ||||||
2 | Jaccs Co., Ltd. | 4 | ||||||
— | Japan Hotel and Resort, Inc. | 3 | ||||||
— | Japan Retail Fund Investment | 5 | ||||||
— | Japan Tobacco, Inc. | 51 | ||||||
— | Kagoshima Bank Ltd. | 3 | ||||||
— | Keihin Corp. | 4 | ||||||
— | Kenedix Realty Investment Corp. | 3 | ||||||
1 | Kinden Corp. | 8 | ||||||
4 | Komatsu Ltd. | 75 | ||||||
— | Kyocera Corp. | 33 | ||||||
— | Kyoei Steel Ltd. | 3 | ||||||
1 | Maeda Road Construction Co., Ltd. | 4 | ||||||
2 | Marudai Food Co., Ltd. | 8 | ||||||
— | MID REIT, Inc. | 2 | ||||||
— | Mimasu Semiconductor Industry Co., Ltd. | 4 | ||||||
4 | Mitsubishi Corp. | 93 | ||||||
4 | Mitsubishi Estate Co., Ltd. | 56 | ||||||
39 | Mitsubishi UFJ Financial Group, Inc. | 206 | ||||||
3 | Mitsui & Co., Ltd. | 39 | ||||||
— | Mitsui Sugar Co., Ltd. | 2 | ||||||
— | Mitsumi Electric Co., Ltd. | 1 | ||||||
1 | Nabtesco Corp. | 11 | ||||||
— | NEC Mobiling Ltd. | 2 | ||||||
— | Nintendo Co., Ltd. | 122 | ||||||
1 | Nippo Corp. | 6 | ||||||
— | Nippon Commercial Investment | 2 | ||||||
— | Nippon Residential | 3 | ||||||
— | Nippon Seiki Co., Ltd. | 3 | ||||||
— | Nippon Soda Co., Ltd. | 2 | ||||||
1 | Nishimatsu Construction Co., Ltd. | 2 | ||||||
1 | Nittetsu Mining Co., Ltd. | 5 | ||||||
— | Noevir | 2 | ||||||
1 | Noritsu Koki Co., Ltd. | 4 | ||||||
— | NTT DoCoMo, Inc. | 19 | ||||||
7 | Osaka Gas Co., Ltd. | 23 | ||||||
— | Osaka Securities Exchange Co., Ltd. | 19 | ||||||
4 | Penta-Ocean Construction Co. | 4 | ||||||
— | Ricoh Leasing Co., Ltd. | 4 | ||||||
— | Round One Corp. | 3 | ||||||
— | Ryosan Co., Ltd. | 2 | ||||||
— | Ryoyo Electro Corp. | 2 | ||||||
1 | San-In Godo Bank Ltd. | 6 | ||||||
1 | Sanki Engineering Co., Ltd. | 4 | ||||||
1 | Sanyo Special Steel Co., Ltd. | 4 | ||||||
2 | Seino Holdings Corp. | 15 | ||||||
— | Shimachu Co., Ltd. | 5 | ||||||
2 | Shin-Etsu Chemical Co., Ltd. | 80 | ||||||
7 | Shionogi & Co., Ltd. | 145 | ||||||
1 | Sintokogio Ltd. | 4 | ||||||
2 | Softbank Corp. | 57 | ||||||
1 | Sumitomo Mitsui Financial Group, Inc. | 37 | ||||||
1 | T&D Holdings, Inc. | 22 | ||||||
— | Takata Corp. | 4 | ||||||
2 | The Daiei, Inc. • | 7 | ||||||
— | The Okinawa Electric Power Co., Inc. | 8 | ||||||
1 | The Yamanashi Chuo Bank Ltd. | 4 | ||||||
2 | Toagosei Co., Ltd. | 7 | ||||||
— | Tohokushinsha Film Corp. | 2 | ||||||
1 | Tokuyama Corp. | 5 | ||||||
13 | Tokyo Gas Co., Ltd. | 52 | ||||||
1 | Tokyo Steel Manufacturing Co., Ltd. | 18 | ||||||
— | Topre Corp. | 2 | ||||||
— | Torii Pharmaceutical Co., Ltd. | 5 | ||||||
10 | Toshiba Corp. | 59 | ||||||
2 | Toshiba TEC Corp. | 8 | ||||||
1 | Toyo Kohan Co., Ltd. | 4 | ||||||
— | TS Technology Co., Ltd. | 8 | ||||||
— | TV Asahi Corp. | 6 | ||||||
— | Unipres Corp. | 5 | ||||||
— | Warabeya Nichiyo Co., Ltd. | 4 | ||||||
1 | Yamada Denki Co., Ltd. | 54 | ||||||
2 | Yodogawa Steel Works Ltd. | 6 | ||||||
2,339 | ||||||||
Jersey — 0.1% | ||||||||
— | Rangold Resources Ltd. | 11 | ||||||
Luxembourg — 0.3% | ||||||||
6 | Colt Telecom Group S.A. • | 12 | ||||||
1 | Gagfah S.A. | 7 | ||||||
1 | Millicom International Cellular S.A. • | 44 | ||||||
— | Ternium S.A. ADR | 4 | ||||||
67 | ||||||||
Malaysia — 0.2% | ||||||||
15 | Air Asia BHD • | 6 |
8
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 96.2% — (continued) | ||||||||
Malaysia — 0.2% — (continued) | ||||||||
8 | Genting Berhad | $ | 16 | |||||
14 | PLUS Expressways Berhad | 14 | ||||||
36 | ||||||||
Mexico — 0.2% | ||||||||
1 | America Movil S.A. de C.V. ADR | 32 | ||||||
8 | Cemex S.A. CPO • | 8 | ||||||
3 | Wal-Mart de Mexico | 11 | ||||||
51 | ||||||||
Netherlands — 3.9% | ||||||||
— | Accell Group | 3 | ||||||
10 | AerCap Holdings N.V. • | 82 | ||||||
— | BinckBank N.V. | 3 | ||||||
— | Draka Holding N.V. | 5 | ||||||
— | Gemalto N.V. • | 12 | ||||||
1 | Heineken N.V. | 55 | ||||||
9 | Koninklijke (Royal) KPN N.V. | 154 | ||||||
2 | Koninklijke Philips Electronics N.V. | 60 | ||||||
1 | OCE N.V. | 4 | ||||||
3 | Plaza Centers N.V. | 6 | ||||||
5 | Qiagen N.V. • | 96 | ||||||
4 | SBM Offshore N.V. | 69 | ||||||
3 | TNT N.V. | 78 | ||||||
6 | Unilever N.V. CVA | 199 | ||||||
— | Unit 4 Agresso N.V. • | 7 | ||||||
— | Vastned Offices | 5 | ||||||
838 | ||||||||
New Zealand — 0.0% | ||||||||
1 | Nuplex Industries Ltd. | 2 | ||||||
Norway — 0.2% | ||||||||
3 | Aker Kvaerner | 41 | ||||||
— | Atea ASA | 2 | ||||||
— | Bonheur ASA | 6 | ||||||
2 | Norwegian Property ASA | 4 | ||||||
1 | Songa Offshore SE • | 5 | ||||||
— | Sparebanken Midt-Norge | 4 | ||||||
— | TGS Nopec Geophysical Co. ASA • | 5 | ||||||
67 | ||||||||
Peru — 0.1% | ||||||||
— | Compania De Minas Buenaventur ADR | 16 | ||||||
Philippines — 0.0% | ||||||||
77 | Metro Pacific Investments Corp. • | 5 | ||||||
Poland — 0.1% | ||||||||
— | Bank Pekao S.A. | 12 | ||||||
Portugal — 0.0% | ||||||||
1 | Redes Energeticas Nacionais | 4 | ||||||
Russia — 2.0% | ||||||||
1 | Mechel ADR | 14 | ||||||
— | Mobile Telesystems OJSC ADR | 18 | ||||||
13 | OAO Gazprom Class S ADR | 307 | ||||||
2 | OAO Rosneft Oil Co. § | 18 | ||||||
3 | Vimpel-Communications ADR | 52 | ||||||
409 | ||||||||
Singapore — 0.5% | ||||||||
5 | Hi-P International Ltd. | 2 | ||||||
25 | Olam International Ltd. | 48 | ||||||
11 | Oversea-Chinese Banking Corp., Ltd. | 61 | ||||||
111 | ||||||||
South Africa — 1.5% | ||||||||
2 | ABSA Group Ltd. | 35 | ||||||
12 | African Bank Investments Ltd. | 49 | ||||||
— | AngloGold Ltd. ADR | 8 | ||||||
2 | Aspen Pharmacare Holdings Ltd. | 13 | ||||||
2 | Barloworld Ltd. | 11 | ||||||
1 | Harmony Gold Mining Co., Ltd. ADR | 10 | ||||||
2 | Impala Platinum Holdings Ltd. | 36 | ||||||
1 | Imperial Holdings Ltd. | 12 | ||||||
6 | MTN Group Ltd. | 95 | ||||||
— | Naspers Ltd. | 17 | ||||||
— | Sasol Ltd. | 17 | ||||||
303 | ||||||||
South Korea — 0.9% | ||||||||
— | Asia Cement Co., Ltd. | 4 | ||||||
— | Busan Bank • | 4 | ||||||
— | CJ Corp. | 8 | ||||||
1 | Dae Duck Electronics | 3 | ||||||
— | Daehan Flour Mills Co., Ltd. | 4 | ||||||
1 | Daewoo Heavy Industries & Machinery Ltd. | 12 | ||||||
1 | Dongbu Hitek Co., Ltd. | 3 | ||||||
1 | Dongyang Mechatronics Corp. • | 2 | ||||||
— | Global & Yuasa | 1 | ||||||
— | Haansoft, Inc. | 2 | ||||||
2 | Halim Co., Ltd. • | 4 | ||||||
— | Handsome Co., Ltd. | 3 | ||||||
1 | Hansol Paper Co., Ltd. | 5 | ||||||
1 | Hanwha Chemical Corp. | 5 | ||||||
— | Hyundai Hysco | 3 | ||||||
— | Intops Co., Ltd. | 3 | ||||||
— | Jeonbuk Bank | 2 | ||||||
— | KB Financial Group, Inc. | 11 | ||||||
— | Kolon Industries, Inc. | 5 | ||||||
— | Korea Kumho Petrochemical Co., Ltd. | 3 | ||||||
— | Korea Telecom Corp. | 11 | ||||||
— | Korean Air Lines Co., Ltd. | 12 | ||||||
— | LG Dacom Corp. | 6 | ||||||
— | LG Electronics, Inc. • | 18 | ||||||
— | LG International • | 4 | ||||||
— | Lotte Shopping Co. • | 6 | ||||||
— | Meritz Fire & Marine Insurance | 3 | ||||||
1 | ON*Media Corp. • | 3 | ||||||
— | Pacific Corp. | 2 | ||||||
— | Sambu Construction Co., Ltd. | 2 | ||||||
— | Samsung Electronics Co., Ltd. | 91 | ||||||
— | Shinhan Financial Group Co., Ltd. | 16 | ||||||
— | STX Engine Co., Ltd. | 4 | ||||||
— | Sungwoo Hitech Co., Ltd. | 3 | ||||||
268 | ||||||||
Spain — 4.1% | ||||||||
1 | Abertis Infraestructuras S.A. | 17 | ||||||
— | Aguas de Barcelona | 5 | ||||||
18 | Banco Santander Central Hispano S.A. | 284 | ||||||
— | Construcciones y Auxiliar de | 8 | ||||||
— | Corp Financiera Alba | 21 | ||||||
2 | Iberdrola S.A. | 18 | ||||||
1 | Laboratorios Almiral S.A. | 14 | ||||||
— | Miquel y Costas & Miquel S.A. | 3 |
9
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 96.2% — (continued) | ||||||||
Spain — 4.1% — (continued) | ||||||||
— | Obrascon Huarte Lain S.A. | $ | 8 | |||||
— | Prosegur Compania de Seguridad S.A. | 3 | ||||||
4 | Red Electrica Corporacion S.A. | 228 | ||||||
— | Tecnicas Reunidas S.A. | 19 | ||||||
9 | Telefonica S.A. | 238 | ||||||
— | Viscofan S.A. | 6 | ||||||
872 | ||||||||
Sweden — 0.9% | ||||||||
— | AF Ab Class B | 6 | ||||||
1 | Assa Abloy Ab | 24 | ||||||
1 | Boliden Ab | 11 | ||||||
1 | Bure Equity Ab | 7 | ||||||
— | Cardo Ab | 7 | ||||||
— | Hexpol Ab • | 4 | ||||||
— | Investment Ab Latour | 6 | ||||||
2 | Lundin Petroleum Ab • | 14 | ||||||
— | NCC Ab Class B | 7 | ||||||
2 | Niscayah Group Ab | 4 | ||||||
4 | Telefonaktiebolaget LM Ericsson | 37 | ||||||
2 | Volvo Ab Class B | 23 | ||||||
150 | ||||||||
Switzerland — 7.8% | ||||||||
2 | ABB Ltd. | 42 | ||||||
— | Actelion Ltd. • | 12 | ||||||
1 | Adecco S.A. | 31 | ||||||
— | AFG Arbonia-Forster Holding AG | 3 | ||||||
— | Basellandschaftliche Kantonalbank | 6 | ||||||
— | Bell Holding AG | 3 | ||||||
— | Berner Kantonalbank | 6 | ||||||
— | Clariant AG | 4 | ||||||
— | Compagnie Financiere | 2 | ||||||
3 | Credit Suisse Group AG | 146 | ||||||
— | Implenia AG | 4 | ||||||
5 | Julius Baer Group Ltd. | 180 | ||||||
— | Kardex | 4 | ||||||
— | Kuehne & Nagel International AG | 27 | ||||||
— | Luzerner Kantonalbank | 7 | ||||||
— | Micronas Semiconductor Holding AG • | 2 | ||||||
1 | Mobilezone Holdings | 4 | ||||||
10 | Nestle S.A. | 464 | ||||||
1 | Roche Holding AG | 206 | ||||||
— | Romande Energie Holding S.A. | 2 | ||||||
— | Schindler Holding-Part Certificates | 24 | ||||||
— | Sonova Holding AG | 22 | ||||||
— | Swatch Group AG | 70 | ||||||
— | Swiss Life Holding AG | 11 | ||||||
— | Synthes, Inc. | 15 | ||||||
17 | UBS AG | 279 | ||||||
— | Valora Holding AG | 3 | ||||||
1 | Zurich Financial Services AG | 127 | ||||||
1,706 | ||||||||
Taiwan — 2.3% | ||||||||
5 | Acer, Inc. | 11 | ||||||
15 | Advanced Semiconductor Engineering, Inc. | 12 | ||||||
14 | Chinatrust Financial Holding Co., Ltd. | 9 | ||||||
30 | Delta Electronics, Inc. | 83 | ||||||
15 | Hon Hai Precision Industry Co., Ltd. | 58 | ||||||
10 | Hon Hai Precision Industry Co., Ltd. GDR § | 80 | ||||||
9 | MediaTek, Inc. | 120 | ||||||
9 | Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 83 | ||||||
14 | Yuanta Financial Holding Co. | 9 | ||||||
465 | ||||||||
Thailand — 0.4% | ||||||||
9 | Bangkok Bank plc | 29 | ||||||
115 | Bank of Ayudhya plc | 63 | ||||||
92 | ||||||||
Turkey — 0.4% | ||||||||
6 | Turkcell Iletisim Hizmetleri A.S. | 39 | ||||||
2 | Turkcell Iletisim Hizmetleri A.S. ADR | 35 | ||||||
74 | ||||||||
United Kingdom — 18.8% | ||||||||
4 | Admiral Group plc | 65 | ||||||
3 | Anglo American plc • | 116 | ||||||
4 | Antofagasta | 48 | ||||||
30 | Arm Holdings plc | 73 | ||||||
5 | Ashtead Group plc | 7 | ||||||
2 | AstraZeneca plc | 90 | ||||||
3 | AstraZeneca plc ADR | 130 | ||||||
1 | Autonomy Corp. plc • | 25 | ||||||
7 | BAE Systems plc | 34 | ||||||
3 | Barclays Bank plc | 18 | ||||||
2 | Barratt Developments plc | 4 | ||||||
15 | BG Group plc | 256 | ||||||
2 | BHP Billiton plc | 62 | ||||||
18 | BP plc | 173 | ||||||
3 | BP plc ADR | 149 | ||||||
7 | British American Tobacco plc | 212 | ||||||
7 | Burberry Group plc | 57 | ||||||
8 | Carphone Warehouse Group plc | 25 | ||||||
8 | Catlin Group Ltd. | 41 | ||||||
— | Clarkson plc | 3 | ||||||
1 | Computacenter plc | 7 | ||||||
5 | Croda International plc | 56 | ||||||
1 | CSR plc • | 4 | ||||||
— | Daejan Holdings plc | 7 | ||||||
2 | Davis Service Group plc | 15 | ||||||
2 | Delta plc | 6 | ||||||
2 | Devro plc | 5 | ||||||
1 | Diploma plc | 2 | ||||||
2 | eaga plc | 4 | ||||||
8 | easyJet plc • | 46 | ||||||
2 | Enterprise Inns plc | 4 | ||||||
3 | Eurasian Natural Resources Corp. | 42 | ||||||
3 | Fresnillo plc | 42 | ||||||
33 | Friends Provident Group plc | 44 | ||||||
2 | GlaxoSmithKline plc | 45 | ||||||
1 | Goldshield Group plc | 4 | ||||||
31 | HSBC Holding plc | 344 | ||||||
4 | Imperial Tobacco Group plc | 114 | ||||||
19 | Innovation Group plc | 4 | ||||||
2 | Investec plc | 13 | ||||||
4 | KCOM Group plc | 3 | ||||||
6 | Kingfisher plc | 23 | ||||||
11 | Lancashire Holdings Ltd. | 93 | ||||||
13 | Logica plc | 26 | ||||||
10 | Management Consulting Group plc | 4 | ||||||
26 | Marks & Spencer Group plc | 144 |
10
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 96.2% — (continued) | ||||||||||||
United Kingdom — 18.8% — (continued) | ||||||||||||
2 | McBride plc | $ | 6 | |||||||||
7 | Meggitt plc | 29 | ||||||||||
1 | Micro Focus International | 3 | ||||||||||
1 | Millennium & Copthorne Hotels plc | 4 | ||||||||||
2 | Mitie Group plc | 6 | ||||||||||
— | Next plc | 14 | ||||||||||
3 | Paragon Group Companies plc | 8 | ||||||||||
2 | Persimmon plc | 10 | ||||||||||
1 | Petrofac Ltd. | 16 | ||||||||||
26 | Premier Foods plc | 15 | ||||||||||
2 | Punch Taverns plc | 3 | ||||||||||
1 | PureCircle Ltd. | 3 | ||||||||||
3 | Reckitt Benckiser Group plc | 143 | ||||||||||
5 | Regus plc | 8 | ||||||||||
4 | Rentokil Initial plc | 8 | ||||||||||
10 | Resolution plc • | 15 | ||||||||||
19 | Rexam plc | 85 | ||||||||||
— | Rightmove | 4 | ||||||||||
6 | Rio Tinto plc | 276 | ||||||||||
2 | ROK plc | 2 | ||||||||||
10 | Rolls-Royce Group plc | 71 | ||||||||||
1 | RPC Group plc | 2 | ||||||||||
4 | Senior plc | 4 | ||||||||||
2 | Southern Cross Healthcare Ltd. | 4 | ||||||||||
3 | Spice plc | 3 | ||||||||||
13 | Standard Chartered plc | 327 | ||||||||||
12 | Thomas Cook Group plc | 40 | ||||||||||
1 | Travis Perkins plc | 15 | ||||||||||
1 | Vedanta Resources plc | 46 | ||||||||||
34 | Vodafone Group plc | 74 | ||||||||||
10 | Xstrata plc | 144 | ||||||||||
5 | Yell Group plc | 4 | ||||||||||
4,081 | ||||||||||||
United States — 1.0% | ||||||||||||
— | ACE Ltd. | 20 | ||||||||||
— | Central European Media Enterprises Ltd. • | 8 | ||||||||||
— | Cott Corp. • | 3 | ||||||||||
1 | Netease.com, Inc. • | 54 | ||||||||||
1 | Noble Corp. | 24 | ||||||||||
2 | Omega Navigation Enterprises | 5 | ||||||||||
1 | Open Text Corp. • | 18 | ||||||||||
1 | PartnerRe Ltd. | 73 | ||||||||||
205 | ||||||||||||
Total common stocks (cost $19,317) | $ | 20,442 | ||||||||||
PREFERRED STOCKS — 0.0% | ||||||||||||
Germany — 0.0% | ||||||||||||
— | Prosieben Sat.1 Media AG | $ | 5 | |||||||||
Total preferred stocks (cost $3) | $ | 5 | ||||||||||
EXCHANGE TRADED FUNDS — 0.9% | ||||||||||||
United States — 0.9% | ||||||||||||
3 | iShares MSCI EAFE Index Fund | $ | 164 | |||||||||
1 | SPDR S&P International Small Cap | 24 | ||||||||||
Total exchange traded funds (cost $183) | $ | 188 | ||||||||||
Total long-term investments (cost $19,503) | $ | 20,635 | ||||||||||
SHORT-TERM INVESTMENTS — 2.3% | ||||||||||||
Repurchase Agreements — 2.3% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $20, collateralized by GNMA 5.00%, 2039, value of $20) | ||||||||||||
$ | 20 | 0.08%, 10/30/2009 | $ | 20 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $115, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $118) | ||||||||||||
115 | 0.08%, 10/30/2009 | 115 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $128, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $131) | ||||||||||||
128 | 0.08%, 10/30/2009 | 128 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1, collateralized by U.S. Treasury Note 2.75%, 2013, value of $1) | ||||||||||||
1 | 0.05%, 10/30/2009 | 1 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $223, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $227) | ||||||||||||
223 | 0.07%, 10/30/2009 | 223 | ||||||||||
487 | ||||||||||||
Total short-term investments (cost $487) | $ | 487 | ||||||||||
Total investments (cost $19,990)▲ | 99.4 | % | $ | 21,122 | ||||||||
Other assets and liabilities | 0.6 | % | 117 | |||||||||
Total net assets | 100.0 | % | $ | 21,239 | ||||||||
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 95.2% of total net assets at October 31, 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. |
11
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $21,113 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 1,924 | ||
Unrealized Depreciation | (1,915 | ) | ||
Net Unrealized Appreciation | $ | 9 | ||
† | 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 October 31, 2009, was $—, which represents —% of total net assets. This amount excludes securities that are principally traded in certain foreign markets and whose prices are 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 October 31, 2009, was $141, which represents 0.66% 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 October 31, 2009, the market value of these securities amounted to $18 or 0.08% 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 | |||||||
06/2008 | 5 | ABC Learning Centres Ltd. | $ | 5 |
Unrealized | ||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||
Australian Dollar (Buy) | $ | 103 | $ | 106 | 01/25/10 | $ | (3 | ) | ||||||
British Pound (Buy) | 3 | 3 | 11/02/09 | — | ||||||||||
British Pound (Buy) | 11 | 11 | 11/03/09 | — | ||||||||||
British Pound (Buy) | 17 | 17 | 11/04/09 | — | ||||||||||
British Pound (Sell) | 2 | 2 | 11/02/09 | — | ||||||||||
British Pound (Sell) | 9 | 9 | 11/03/09 | — | ||||||||||
Euro (Buy) | 31 | 31 | 11/02/09 | — | ||||||||||
Euro (Buy) | 7 | 7 | 11/03/09 | — | ||||||||||
Euro (Sell) | 3 | 3 | 11/02/09 | — | ||||||||||
Euro (Buy) | 28 | 28 | 11/04/09 | — | ||||||||||
Hong Kong Dollar (Sell) | 9 | 9 | 11/02/09 | — | ||||||||||
Japanese Yen (Buy) | 6 | 6 | 11/04/09 | — | ||||||||||
Swedish Krona (Sell) | 11 | 11 | 11/02/09 | — | ||||||||||
Swedish Krona (Sell) | 12 | 12 | 11/03/09 | — | ||||||||||
Swiss Franc (Sell) | 24 | 24 | 11/02/09 | — | ||||||||||
$ | (3 | ) | ||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Percentage of | ||||
Description | Net Assets | |||
Australian Dollar | 1.4 | % | ||
Brazilian Real | 1.2 | |||
British Pound | 18.1 | |||
Canadian Dollar | 1.9 | |||
Danish Kroner | 0.6 | |||
Egyptian Pound | 0.2 | |||
Euro | 27.5 | |||
Hong Kong Dollar | 5.4 | |||
Hungarian Forint | 0.0 | |||
Indian Rupee | 1.4 | |||
Indonesian New Rupiah | 0.2 | |||
Israeli New Shekel | 0.1 | |||
Japanese Yen | 11.4 | |||
Malaysian Ringgit | 0.2 | |||
Mexican Peso | 0.0 | |||
New Zealand Dollar | 0.0 | |||
Norwegian Krone | 0.2 | |||
Philippine Peso | 0.0 | |||
Polish New Zloty | 0.1 | |||
Republic of Korea Won | 0.9 | |||
Singapore Dollar | 0.6 | |||
South African Rand | 1.4 | |||
Swedish Krona | 0.9 | |||
Swiss Franc | 7.8 | |||
Taiwanese Dollar | 1.5 | |||
Thai Bhat | 0.4 | |||
Turkish New Lira | 0.2 | |||
United States Dollar | 15.8 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
12
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Automobiles & Components | $ | 802 | $ | 2 | $ | 800 | $ | — | ||||||||
Banks | 2,510 | 475 | 2,035 | — | ||||||||||||
Capital Goods | 1,667 | 107 | 1,560 | — | ||||||||||||
Commercial & Professional Services | 155 | 7 | 148 | — | ||||||||||||
Consumer Durables & Apparel | 384 | 15 | 369 | — | ||||||||||||
Consumer Services | 177 | 24 | 153 | — | ||||||||||||
Diversified Financials | 906 | 213 | 693 | — | ||||||||||||
Energy | 1,926 | 774 | 1,152 | — | ||||||||||||
Food & Staples Retailing | 286 | 21 | 265 | — | ||||||||||||
Food, Beverage & Tobacco | 1,451 | 42 | 1,409 | — | ||||||||||||
Health Care Equipment & Services | 156 | 4 | 152 | — | ||||||||||||
Household & Personal Products | 234 | 33 | 201 | — | ||||||||||||
Insurance | 759 | 97 | 662 | — | ||||||||||||
Materials | 2,330 | 674 | 1,656 | — | ||||||||||||
Media | 65 | 8 | 57 | — | ||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences | 1,412 | 280 | 1,132 | — | ||||||||||||
Real Estate | 492 | 32 | 460 | — | ||||||||||||
Retailing | 672 | 16 | 656 | — | ||||||||||||
Semiconductors & Semiconductor Equipment | 454 | 89 | 365 | — | ||||||||||||
Software & Services | 497 | 139 | 358 | — | ||||||||||||
Technology Hardware & Equipment | 587 | 88 | 499 | — | ||||||||||||
Telecommunication Services | 1,044 | 218 | 826 | — | ||||||||||||
Transportation | 570 | 87 | 483 | — | ||||||||||||
Utilities | 906 | 198 | 708 | — | ||||||||||||
Total | 20,442 | 3,643 | 16,799 | — | ||||||||||||
Exchange Traded Funds | 188 | 188 | — | — | ||||||||||||
Preferred Stocks ‡ | 5 | — | 5 | — | ||||||||||||
Short-Term Investments | 487 | — | 487 | — | ||||||||||||
Total | $ | 21,122 | $ | 3,831 | $ | 17,291 | $ | — | ||||||||
Other Financial Instruments * | $ | — | $ | — | $ | — | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 3 | $ | — | $ | 3 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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. |
Balance as of | Change in | Balance as of | ||||||||||||||||||
October 31, | Realized Gain | Unrealized | October 31, | |||||||||||||||||
2008 | (Loss) | Appreciation | Net Sales | 2009 | ||||||||||||||||
Assets: | ||||||||||||||||||||
Common Stock | $ | 1 | $ | — | $ | — | * | $ | (1 | ) | $ | — | ||||||||
Total | $ | 1 | $ | — | $ | — | $ | (1 | ) | $ | — | |||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $(1). |
13
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $19,990) | $ | 21,122 | ||
Cash | 21 | |||
Foreign currency on deposit with custodian (cost $15) | 15 | |||
Unrealized appreciation on forward foreign currency contracts | — | |||
Receivables: | ||||
Investment securities sold | 127 | |||
Fund shares sold | 23 | |||
Dividends and interest | 37 | |||
Other assets | 91 | |||
Total assets | 21,436 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 3 | |||
Payables: | ||||
Investment securities purchased | 170 | |||
Investment management fees | 3 | |||
Distribution fees | 1 | |||
Accrued expenses | 20 | |||
Total liabilities | 197 | |||
Net assets | $ | 21,239 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 26,585 | |||
Accumulated undistributed net investment income | 154 | |||
Accumulated net realized loss on investments | (6,630 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 1,130 | |||
Net assets | $ | 21,239 | ||
Shares authorized | 525,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $7.35/$7.78 | |||
Shares outstanding | 1,188 | |||
Net assets | $ | 8,740 | ||
Class B: Net asset value per share | $ | 7.31 | ||
Shares outstanding | 135 | |||
Net assets | $ | 989 | ||
Class C: Net asset value per share | $ | 7.31 | ||
Shares outstanding | 154 | |||
Net assets | $ | 1,127 | ||
Class I: Net asset value per share | $ | 7.38 | ||
Shares outstanding | 102 | |||
Net assets | $ | 755 | ||
Class R3: Net asset value per share | $ | 7.35 | ||
Shares outstanding | 100 | |||
Net assets | $ | 735 | ||
Class R4: Net asset value per share | $ | 7.36 | ||
Shares outstanding | 101 | |||
Net assets | $ | 745 | ||
Class R5: Net asset value per share | $ | 7.37 | ||
Shares outstanding | 100 | |||
Net assets | $ | 740 | ||
Class Y: Net asset value per share | $ | 7.38 | ||
Shares outstanding | 1,004 | |||
Net assets | $ | 7,408 | ||
14
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 412 | ||
Interest | — | |||
Less: Foreign tax withheld | (46 | ) | ||
Total investment income | 366 | |||
Expenses: | ||||
Investment management fees | 134 | |||
Administrative services fees | 3 | |||
Transfer agent fees | 4 | |||
Distribution fees | ||||
Class A | 9 | |||
Class B | 7 | |||
Class C | 7 | |||
Class R3 | 3 | |||
Class R4 | 2 | |||
Custodian fees | 70 | |||
Accounting services fees | 2 | |||
Registration and filing fees | 121 | |||
Board of Directors’ fees | 2 | |||
Audit fees | 26 | |||
Other expenses | 9 | |||
Total expenses (before waivers and fees paid indirectly) | 399 | |||
Expense waivers | (191 | ) | ||
Commission recapture | — | |||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (191 | ) | ||
Total expenses, net | 208 | |||
Net Investment Income | 158 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (3,546 | ) | ||
Net realized gain on forward foreign currency contracts | 21 | |||
Net realized gain on other foreign currency transactions | — | |||
Net Realized Loss on Investments | (3,525 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 6,369 | |||
Net unrealized depreciation of forward foreign currency contracts | (17 | ) | ||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (2 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 6,350 | |||
Net Gain on Investments and Foreign Currency Transactions | 2,825 | |||
Net Increase in Net Assets Resulting from Operations | $ | 2,983 | ||
15
For the Period | ||||||||
For the | June 30, 2008* | |||||||
Year Ended | through | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 158 | $ | 27 | ||||
Net realized loss on investments | (3,525 | ) | (3,115 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 6,350 | (5,220 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 2,983 | (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 | 5,683 | 4,238 | ||||||
Class B | 227 | 1,005 | ||||||
Class C | 363 | 1,034 | ||||||
Class I | 17 | 1,000 | ||||||
Class R3 | — | 1,000 | ||||||
Class R4 | 9 | 1,000 | ||||||
Class R5 | 2 | 1,000 | ||||||
Class Y | 25 | 10,000 | ||||||
Net increase from capital share transactions | 6,326 | 20,277 | ||||||
Net Increase In Net Assets | 9,270 | 11,969 | ||||||
Net Assets: | ||||||||
Beginning of period | 11,969 | — | ||||||
End of period | $ | 21,239 | $ | 11,969 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 154 | $ | 12 | ||||
* | Commencement of operations. |
16
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
17
Notes to Financial Statements — (continued)
October 31, 2009
(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. 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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, foreign |
18
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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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 |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
relative to the U.S. dollar. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 may use 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 October 31, 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. | ||
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. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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 October 31, 2009, the Fund had no outstanding when-issued or delayed delivery securities. |
20
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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||||||||
Foreign exchange contracts | Unrealized appreciation on forward | $ | — | Unrealized depreciation on forward | $ | 3 | ||||||||||
foreign currency contracts | foreign currency contracts |
The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the year ended October 31, 2009. | |||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | 21 | $ | — | $ | 21 | ||||||||||||
Total | $ | — | $ | — | $ | — | $ | 21 | $ | — | $ | 21 | ||||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | (17 | ) | — | $ | (17 | ) | |||||||||||||||
Total | $ | — | $ | — | $ | — | $ | (17 | ) | $ | — | $ | (17 | ) | ||||||||||
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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend |
21
October 31, 2009
(000’s Omitted)
distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | |||
c) | Distributions and Components of Distributable Earnings – 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, 2009 | ||||
Ordinary Income | $ | 39 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 182 | ||
Accumulated Capital Losses * | (5,537 | ) | ||
Unrealized Appreciation † | 9 | |||
Total Accumulated Deficit | $ | (5,346 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase accumulated undistributed net investment income by $23 and decrease accumulated net realized loss on investments by $23. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 2,149 | ||
2017 | 3,388 | |||
Total | $ | 5,537 | ||
f) | Accounting for Uncertainty in Income Taxes – Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 |
22
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 year ended October 31, 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 services 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 year ended October 31, 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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | |||||||
October 31, | October 31, | |||||||
2009 | 2008 | |||||||
Class A Shares | 1.65 | % | 1.57 | %* | ||||
Class B Shares | 2.39 | 2.30 | * | |||||
Class C Shares | 2.39 | 2.31 | * | |||||
Class I Shares | 1.29 | 1.29 | * | |||||
Class R3 Shares | 1.90 | 1.89 | * | |||||
Class R4 Shares | 1.65 | 1.64 | * | |||||
Class R5 Shares | 1.39 | 1.39 | * | |||||
Class Y Shares | 1.30 | 1.30 | * |
* | From June 30, 2008 (commencement of operations), through October 31, 2008. |
23
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $23 and contingent deferred sales charges in an amount that rounds to zero from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $3 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. 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 |
24
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 27,565 | ||
Sales Proceeds Excluding U.S. Government Obligations | 21,236 |
For the Year Ended October 31, 2009 | For the Period 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 | 784 | 1 | (27 | ) | — | 758 | 432 | — | (2 | ) | — | 430 | ||||||||||||||||||||||||||||
Amount | $ | 5,838 | $ | 8 | $ | (163 | ) | $ | — | $ | 5,683 | $ | 4,256 | $ | — | $ | (18 | ) | $ | — | $ | 4,238 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 39 | — | (5 | ) | — | 34 | 101 | — | — | — | 101 | |||||||||||||||||||||||||||||
Amount | $ | 262 | $ | — | $ | (35 | ) | $ | — | $ | 227 | $ | 1,005 | $ | — | $ | — | $ | — | $ | 1,005 | |||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 60 | — | (10 | ) | — | 50 | 105 | — | (1 | ) | — | 104 | ||||||||||||||||||||||||||||
Amount | $ | 419 | $ | — | $ | (56 | ) | $ | — | $ | 363 | $ | 1,038 | $ | — | $ | (4 | ) | $ | — | $ | 1,034 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 2 | — | — | — | 2 | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | 15 | $ | 2 | $ | — | $ | — | $ | 17 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | ||||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | ||||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 2 | — | (1 | ) | — | 1 | 100 | — | — | — | 100 | |||||||||||||||||||||||||||||
Amount | $ | 12 | $ | 1 | $ | (4 | ) | $ | — | $ | 9 | $ | 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 | $ | — | $ | 25 | $ | — | $ | — | $ | 25 | $ | 10,000 | $ | — | $ | — | $ | — | $ | 10,000 |
25
October 31, 2009
(000’s Omitted)
9. | Industry Classifications: |
26
27
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 5.88 | $ | 0.06 | $ | — | $ | 1.43 | $ | 1.49 | $ | (0.02 | ) | $ | — | $ | — | $ | (0.02 | ) | $ | 1.47 | $ | 7.35 | ||||||||||||||||||||
B | 5.87 | 0.02 | — | 1.42 | 1.44 | — | — | — | — | 1.44 | 7.31 | |||||||||||||||||||||||||||||||||
C | 5.87 | 0.02 | — | 1.42 | 1.44 | — | — | — | — | 1.44 | 7.31 | |||||||||||||||||||||||||||||||||
I | 5.89 | 0.10 | — | 1.41 | 1.51 | (0.02 | ) | — | — | (0.02 | ) | 1.49 | 7.38 | |||||||||||||||||||||||||||||||
R3 | 5.87 | 0.06 | — | 1.42 | 1.48 | — | — | — | — | 1.48 | 7.35 | |||||||||||||||||||||||||||||||||
R4 | 5.88 | 0.07 | — | 1.42 | 1.49 | (0.01 | ) | — | — | (0.01 | ) | 1.48 | 7.36 | |||||||||||||||||||||||||||||||
R5 | 5.88 | 0.09 | — | 1.42 | 1.51 | (0.02 | ) | — | — | (0.02 | ) | 1.49 | 7.37 | |||||||||||||||||||||||||||||||
Y | 5.89 | 0.10 | — | 1.42 | 1.52 | (0.03 | ) | — | — | (0.03 | ) | 1.49 | 7.38 | |||||||||||||||||||||||||||||||
From (commencement of operations) June 30, 2008, through October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A(f) | 10.00 | 0.01 | — | (4.13 | ) | (4.12 | ) | — | — | — | — | (4.12 | ) | 5.88 | ||||||||||||||||||||||||||||||
B(f) | 10.00 | (0.01 | ) | — | (4.12 | ) | (4.13 | ) | — | — | — | — | (4.13 | ) | 5.87 | |||||||||||||||||||||||||||||
C(f) | 10.00 | (0.01 | ) | — | (4.12 | ) | (4.13 | ) | — | — | — | — | (4.13 | ) | 5.87 | |||||||||||||||||||||||||||||
I(f) | 10.00 | 0.01 | — | (4.12 | ) | (4.11 | ) | — | — | — | — | (4.11 | ) | 5.89 | ||||||||||||||||||||||||||||||
R3(f) | 10.00 | — | — | (4.13 | ) | (4.13 | ) | — | — | — | — | (4.13 | ) | 5.87 | ||||||||||||||||||||||||||||||
R4(f) | 10.00 | — | — | (4.12 | ) | (4.12 | ) | — | — | — | — | (4.12 | ) | 5.88 | ||||||||||||||||||||||||||||||
R5(f) | 10.00 | 0.01 | — | (4.13 | ) | (4.12 | ) | — | — | — | — | (4.12 | ) | 5.88 | ||||||||||||||||||||||||||||||
Y(f) | 10.00 | 0.01 | — | (4.12 | ) | (4.11 | ) | — | — | — | — | (4.11 | ) | 5.89 |
(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) | Commenced operations on June 30, 2008. | |
(g) | Not annualized. | |
(h) | Annualized. |
28
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | |||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | ||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | ||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | |||||||||||||||||||
25.40 | % | $ | 8,740 | 3.10 | % | 1.65 | % | 1.65 | % | 0.99 | % | 161 | % | ||||||||||||
24.53 | 989 | 3.80 | 2.40 | 2.40 | 0.34 | — | |||||||||||||||||||
24.53 | 1,127 | 3.80 | 2.40 | 2.40 | 0.36 | — | |||||||||||||||||||
25.84 | 755 | 2.70 | 1.30 | 1.30 | 1.55 | — | |||||||||||||||||||
25.26 | 735 | 3.39 | 1.90 | 1.90 | 0.96 | — | |||||||||||||||||||
25.43 | 745 | 3.09 | 1.65 | 1.65 | 1.20 | — | |||||||||||||||||||
25.81 | 740 | 2.80 | 1.40 | 1.40 | 1.46 | — | |||||||||||||||||||
25.86 | 7,408 | 2.70 | 1.30 | 1.30 | 1.55 | — | |||||||||||||||||||
(41.20 | )(g) | 2,528 | 2.01 | (h) | 1.57 | (h) | 1.57 | (h) | 0.26 | (h) | 67 | ||||||||||||||
(41.30 | )(g) | 591 | 2.74 | (h) | 2.31 | (h) | 2.31 | (h) | (0.48 | ) (h) | — | ||||||||||||||
(41.30 | )(g) | 611 | 2.75 | (h) | 2.32 | (h) | 2.32 | (h) | (0.49 | ) (h) | — | ||||||||||||||
(41.10 | )(g) | 589 | 1.74 | (h) | 1.30 | (h) | 1.30 | (h) | 0.53 | (h) | — | ||||||||||||||
(41.30 | )(g) | 588 | 2.44 | (h) | 1.90 | (h) | 1.90 | (h) | (0.07 | ) (h) | — | ||||||||||||||
(41.20 | )(g) | 588 | 2.14 | (h) | 1.65 | (h) | 1.65 | (h) | 0.18 | (h) | — | ||||||||||||||
(41.20 | )(g) | 588 | 1.84 | (h) | 1.40 | (h) | 1.40 | (h) | 0.43 | (h) | — | ||||||||||||||
(41.10 | )(g) | 5,886 | 1.74 | (h) | 1.30 | (h) | 1.30 | (h) | 0.52 | (h) | — |
29
The Hartford Mutual Funds, Inc.
December 15, 2009
30
31
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
32
33
DRD* | 100.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.018 | N/A | N/A | 0.018 | ||||||||||||
Class I | 0.024 | N/A | N/A | 0.024 | ||||||||||||
Class R3 | 0.002 | N/A | N/A | 0.002 | ||||||||||||
Class R4 | 0.012 | N/A | N/A | 0.012 | ||||||||||||
Class R5 | 0.021 | N/A | N/A | 0.021 | ||||||||||||
Class Y | 0.025 | N/A | N/A | 0.025 |
34
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,278.30 | $ | 9.59 | $ | 1,000.00 | $ | 1,016.79 | $ | 8.49 | 1.67 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,275.70 | $ | 13.94 | $ | 1,000.00 | $ | 1,012.96 | $ | 12.33 | 2.43 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,275.70 | $ | 13.82 | $ | 1,000.00 | $ | 1,013.06 | $ | 12.23 | 2.41 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,281.30 | $ | 7.42 | $ | 1,000.00 | $ | 1,018.70 | $ | 6.56 | 1.29 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,278.30 | $ | 10.85 | $ | 1,000.00 | $ | 1,015.68 | $ | 9.60 | 1.89 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,280.00 | $ | 9.42 | $ | 1,000.00 | $ | 1,016.94 | $ | 8.34 | 1.64 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,279.50 | $ | 7.99 | $ | 1,000.00 | $ | 1,018.20 | $ | 7.07 | 1.39 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,281.30 | $ | 7.42 | $ | 1,000.00 | $ | 1,018.70 | $ | 6.56 | 1.29 | 184 | 365 |
35
36
37
38
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Dividend and Growth Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
22 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 | ||||
29 | ||||
30 |
(subadvised by Wellington Management Company, LLP) | Investment objective — Seeks a high level of current income consistent with growth of capital. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | 10 | ||||||||||
Year | Year | Year | ||||||||||
Dividend and Growth A# | 12.17 | % | 2.86 | % | 3.14 | % | ||||||
Dividend and Growth A## | 6.00 | % | 1.70 | % | 2.56 | % | ||||||
Dividend and Growth B# | 11.22 | % | 1.97 | % | NA | * | ||||||
Dividend and Growth B## | 6.22 | % | 1.64 | % | NA | * | ||||||
Dividend and Growth C# | 11.37 | % | 2.10 | % | 2.42 | % | ||||||
Dividend and Growth C## | 10.37 | % | 2.10 | % | 2.42 | % | ||||||
Dividend and Growth I# | 12.52 | % | 3.07 | % | 3.25 | % | ||||||
Dividend and Growth R3# | 11.84 | % | 2.84 | % | 3.41 | % | ||||||
Dividend and Growth R4# | 12.27 | % | 3.06 | % | 3.52 | % | ||||||
Dividend and Growth R5# | 12.55 | % | 3.22 | % | 3.61 | % | ||||||
Dividend and Growth Y# | 12.73 | % | 3.30 | % | 3.64 | % | ||||||
Russell 1000 Value Index | 4.78 | % | -0.05 | % | 1.70 | % | ||||||
S&P 500 Index | 9.78 | % | 0.33 | % | -0.95 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year 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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Edward P. Bousa, CFA
Senior Vice President, Partner
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 0.5 | % | ||
Banks (Financials) | 4.5 | |||
Capital Goods (Industrials) | 9.2 | |||
Commercial & Professional Services (Industrials) | 1.7 | |||
Diversified Financials (Financials) | 6.4 | |||
Energy (Energy) | 16.6 | |||
Food & Staples Retailing (Consumer Staples) | 2.2 | |||
Food, Beverage & Tobacco (Consumer Staples) | 5.0 | |||
Health Care Equipment & Services (Health Care) | 3.4 | |||
Household & Personal Products (Consumer Staples) | 2.2 | |||
Insurance (Financials) | 5.0 | |||
Materials (Materials) | 3.1 | |||
Media (Consumer Discretionary) | 2.7 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 10.5 | |||
Retailing (Consumer Discretionary) | 2.5 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 1.1 | |||
Software & Services (Information Technology) | 3.4 | |||
Technology Hardware & Equipment (Information Technology) | 5.7 | |||
Telecommunication Services (Services) | 4.3 | |||
Transportation (Industrials) | 1.7 | |||
Utilities (Utilities) | 5.0 | |||
Short-Term Investments | 3.5 | |||
Other Assets and Liabilities | (0.2 | ) | ||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 96.7% | ||||||||
Automobiles & Components — 0.5% | ||||||||
753 | Honda Motor Co., Ltd. ADR | $ | 23,330 | |||||
Banks — 4.5% | ||||||||
841 | PNC Financial Services Group, Inc. | 41,173 | ||||||
444 | SunTrust Banks, Inc. | 8,483 | ||||||
1,572 | US Bancorp | 36,495 | ||||||
1,714 | Washington Mutual, Inc. Private Placement ⌂●† | 221 | ||||||
4,393 | Wells Fargo & Co. | 120,897 | ||||||
207,269 | ||||||||
Capital Goods — 9.2% | ||||||||
301 | Caterpillar, Inc. | 16,573 | ||||||
1,386 | Deere & Co. | 63,114 | ||||||
616 | General Dynamics Corp. | 38,604 | ||||||
1,011 | General Electric Co. | 14,415 | ||||||
1,176 | Honeywell International, Inc. | 42,189 | ||||||
779 | Illinois Tool Works, Inc. | 35,790 | ||||||
686 | Lockheed Martin Corp. | 47,156 | ||||||
791 | Parker-Hannifin Corp. | 41,886 | ||||||
1,212 | Pentair, Inc. | 35,261 | ||||||
739 | Raytheon Co. | 33,480 | ||||||
591 | Siemens AG ADR | 53,166 | ||||||
421,634 | ||||||||
Commercial & Professional Services — 1.7% | ||||||||
1,300 | Pitney Bowes, Inc. | 31,850 | ||||||
1,599 | Waste Management, Inc. | 47,781 | ||||||
79,631 | ||||||||
Diversified Financials — 6.4% | ||||||||
1,266 | Ameriprise Financial, Inc. | 43,903 | ||||||
3,119 | Bank of America Corp. | 45,480 | ||||||
138 | Goldman Sachs Group, Inc. | 23,415 | ||||||
2,128 | JP Morgan Chase & Co. | 88,895 | ||||||
564 | Morgan Stanley | 18,119 | ||||||
765 | State Street Corp. | 32,107 | ||||||
2,463 | UBS AG ADR | 40,861 | ||||||
292,780 | ||||||||
Energy — 16.6% | ||||||||
1,376 | Anadarko Petroleum Corp. | 83,821 | ||||||
1,214 | Baker Hughes, Inc. | 51,077 | ||||||
990 | BP plc ADR | 56,037 | ||||||
1,980 | Chevron Corp. | 151,572 | ||||||
767 | ConocoPhillips Holding Co. | 38,498 | ||||||
947 | EnCana Corp. ADR | 52,455 | ||||||
1,534 | Exxon Mobil Corp. | 109,943 | ||||||
1,838 | Marathon Oil Corp. | 58,761 | ||||||
1,802 | Total S.A. ADR | 108,222 | ||||||
1,236 | XTO Energy, Inc. | 51,357 | ||||||
761,743 | ||||||||
Food & Staples Retailing — 2.2% | ||||||||
599 | Walgreen Co. | 22,653 | ||||||
1,559 | Wal-Mart Stores, Inc. | 77,436 | ||||||
100,089 | ||||||||
Food, Beverage & Tobacco — 5.0% | ||||||||
1,445 | Nestle S.A. ADR | 67,207 | ||||||
1,068 | PepsiCo, Inc. | 64,661 | ||||||
1,304 | Philip Morris International, Inc. | 61,776 | ||||||
709 | SABMiller plc ADR | 18,528 | ||||||
480 | Unilever N.V. NY Shares ADR | 14,818 | ||||||
226,990 | ||||||||
Health Care Equipment & Services — 3.4% | ||||||||
922 | Cardinal Health, Inc. | 26,127 | ||||||
846 | Covidien plc | 35,642 | ||||||
1,628 | Medtronic, Inc. | 58,112 | ||||||
1,456 | UnitedHealth Group, Inc. | 37,783 | ||||||
157,664 | ||||||||
Household & Personal Products — 2.2% | ||||||||
623 | Kimberly-Clark Corp. | 38,078 | ||||||
1,065 | Procter & Gamble Co. | 61,760 | ||||||
99,838 | ||||||||
Insurance — 5.0% | ||||||||
1,147 | ACE Ltd. | 58,887 | ||||||
523 | Aflac, Inc. | 21,687 | ||||||
789 | Chubb Corp. | 38,277 | ||||||
935 | Marsh & McLennan Cos., Inc. | 21,923 | ||||||
1,832 | MetLife, Inc. | 62,336 | ||||||
536 | Travelers Cos., Inc. | 26,663 | ||||||
229,773 | ||||||||
Materials — 3.1% | ||||||||
801 | Agrium U.S., Inc. | 37,588 | ||||||
1,056 | Barrick Gold Corp. | 37,942 | ||||||
528 | BHP Billiton Ltd. ADR | 34,620 | ||||||
1,533 | International Paper Co. | 34,199 | ||||||
144,349 | ||||||||
Media — 2.7% | ||||||||
2,980 | Comcast Corp. Class A | 43,211 | ||||||
400 | Comcast Corp. Special Class A | 5,602 | ||||||
308 | McGraw-Hill Cos., Inc. | 8,867 | ||||||
1,303 | Time Warner, Inc. | 39,260 | ||||||
987 | Walt Disney Co. | 27,003 | ||||||
123,943 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 10.5% | ||||||||
1,188 | AstraZeneca plc ADR | 53,367 | ||||||
2,282 | Bristol-Myers Squibb Co. | 49,745 | ||||||
2,493 | Eli Lilly & Co. | 84,794 | ||||||
992 | Johnson & Johnson | 58,560 | ||||||
2,229 | Merck & Co., Inc. | 68,946 | ||||||
4,762 | Pfizer, Inc. | 81,103 | ||||||
2,349 | Schering-Plough Corp. | 66,253 | ||||||
410 | Teva Pharmaceutical Industries Ltd. ADR | 20,707 | ||||||
483,475 | ||||||||
Retailing — 2.5% | ||||||||
2,495 | Buck Holdings L.P. ⌂●† | 3,125 | ||||||
1,140 | Gap, Inc. | 24,336 | ||||||
1,330 | Limited Brands, Inc. | 23,406 | ||||||
582 | Lowe’s Co., Inc. | 11,382 | ||||||
2,433 | Staples, Inc. | 52,790 | ||||||
115,039 | ||||||||
Semiconductors & Semiconductor Equipment — 1.1% | ||||||||
2,183 | Texas Instruments, Inc. | 51,201 | ||||||
Software & Services — 3.4% | ||||||||
1,469 | Accenture plc | 54,486 | ||||||
990 | Automatic Data Processing, Inc. | 39,382 | ||||||
2,281 | Microsoft Corp. | 63,238 | ||||||
157,106 | ||||||||
4
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 96.7% — (continued) | ||||||||||||
Technology Hardware & Equipment — 5.7% | ||||||||||||
1,566 | Cisco Systems, Inc. ● | $ | 35,783 | |||||||||
2,330 | Corning, Inc. | 34,046 | ||||||||||
1,364 | Hewlett-Packard Co. | 64,740 | ||||||||||
1,061 | IBM Corp. | 128,016 | ||||||||||
262,585 | ||||||||||||
Telecommunication Services — 4.3% | ||||||||||||
6,813 | AT&T, Inc. | 174,890 | ||||||||||
736 | Verizon Communications, Inc. | 21,779 | ||||||||||
196,669 | ||||||||||||
Transportation — 1.7% | ||||||||||||
635 | FedEx Corp. | 46,173 | ||||||||||
548 | United Parcel Service, Inc. Class B | 29,395 | ||||||||||
75,568 | ||||||||||||
Utilities — 5.0% | ||||||||||||
2,009 | Dominion Resources, Inc. | 68,480 | ||||||||||
966 | Exelon Corp. | 45,385 | ||||||||||
996 | FPL Group, Inc. | 48,894 | ||||||||||
1,298 | PG&E Corp. | 53,063 | ||||||||||
342 | Veolia Environment ADR | 11,156 | ||||||||||
226,978 | ||||||||||||
Total common stocks (cost $4,178,478) | $ | 4,437,654 | ||||||||||
WARRANTS — 0.0% | ||||||||||||
Banks — 0.0% | ||||||||||||
214 | Washington Mutual, Inc. Private Placement ⌂●† | $ | — | |||||||||
Total warrants (cost $—) | $ | — | ||||||||||
Total long-term investments (cost $4,178,478) | $ | 4,437,654 | ||||||||||
SHORT-TERM INVESTMENTS — 3.5% | ||||||||||||
Repurchase Agreements — 3.5% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $6,507, collateralized by GNMA 5.00%, 2039, value of $6,637) | ||||||||||||
$ | 6,507 | 0.08%, 10/30/2009 | $ | 6,507 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $38,121, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - - 2047, value of $38,883) | ||||||||||||
38,120 | 0.08%, 10/30/2009 | 38,120 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $42,465, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $43,314) | ||||||||||||
42,465 | 0.08%, 10/30/2009 | 42,465 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $430, collateralized by U.S. Treasury Note 2.75%, 2013, value of $436) | ||||||||||||
430 | 0.05%, 10/30/2009 | 430 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $73,578, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $75,050) | ||||||||||||
73,578 | 0.07%, 10/30/2009 | 73,578 | ||||||||||
161,100 | ||||||||||||
Total short-term investments (cost $161,100) | $ | 161,100 | ||||||||||
Total investments (cost $4,339,578) ▲ | 100.2 | % | $ | 4,598,754 | ||||||||
Other assets and liabilities | (0.2 | )% | (9,508 | ) | ||||||||
Total net assets | 100.0 | % | $ | 4,589,246 | ||||||||
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 13.8% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $4,376,245 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 482,259 | ||
Unrealized Depreciation | (259,750 | ) | ||
Net Unrealized Appreciation | $ | 222,509 | ||
† | 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 October 31, 2009, was $3,346, which represents 0.07% 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 | |||||||||
06/2007 | 2,495 | Buck Holdings L.P. | $ | 2,497 | ||||||||
04/2008 | 1,714 | Washington Mutual, Inc. Private Placement | 15,000 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
04/2008 | 214 | Washington Mutual, Inc. Private Placement Warrants | $ | — |
The aggregate value of these securities at October 31, 2009 was $3,346 which represents 0.07% of total net assets. | ||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
6
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 4,437,654 | $ | 4,434,308 | $ | — | $ | 3,346 | ||||||||
Warrants ‡ | — | — | — | — | ||||||||||||
Short-Term Investments | 161,100 | — | 161,100 | — | ||||||||||||
Total | $ | 4,598,754 | $ | 4,434,308 | $ | 161,100 | $ | 3,346 | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. |
Balance as of | Change in | Balance as of | ||||||||||||||
October 31, | Unrealized | October 31, | ||||||||||||||
2008 | Depreciation | Net Purchases | 2009 | |||||||||||||
Assets: | ||||||||||||||||
Common Stock | $ | 53 | $ | (5,904 | )* | $ | 9,197 | $ | 3,346 | |||||||
Total | $ | 53 | $ | (5,904 | ) | $ | 9,197 | $ | 3,346 | |||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $(5,904). |
7
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $4,339,578) | $ | 4,598,754 | ||
Cash | 109 | |||
Receivables: | ||||
Investment securities sold | 8,979 | |||
Fund shares sold | 10,174 | |||
Dividends and interest | 8,393 | |||
Other assets | 247 | |||
Total assets | 4,626,656 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 27,572 | |||
Fund shares redeemed | 8,021 | |||
Investment management fees | 478 | |||
Distribution fees | 200 | |||
Accrued expenses | 1,139 | |||
Total liabilities | 37,410 | |||
Net assets | $ | 4,589,246 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 5,041,297 | |||
Accumulated undistributed net investment income | 5,747 | |||
Accumulated net realized loss on investments and foreign currency transactions | (716,974 | ) | ||
Unrealized appreciation of investments | 259,176 | |||
Net assets | $ | 4,589,246 | ||
Shares authorized | 800,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 16.03/$16.96 | ||
Shares outstanding | 164,446 | |||
Net assets | $ | 2,635,571 | ||
Class B: Net asset value per share | $ | 15.76 | ||
Shares outstanding | 14,975 | |||
Net assets | $ | 236,026 | ||
Class C: Net asset value per share | $ | 15.72 | ||
Shares outstanding | 18,223 | |||
Net assets | $ | 286,465 | ||
Class I: Net asset value per share | $ | 15.98 | ||
Shares outstanding | 41,220 | |||
Net assets | $ | 658,690 | ||
Class R3: Net asset value per share | $ | 16.18 | ||
Shares outstanding | 320 | |||
Net assets | $ | 5,171 | ||
Class R4: Net asset value per share | $ | 16.22 | ||
Shares outstanding | 1,194 | |||
Net assets | $ | 19,372 | ||
Class R5: Net asset value per share | $ | 16.24 | ||
Shares outstanding | 120 | |||
Net assets | $ | 1,947 | ||
Class Y: Net asset value per share | $ | 16.25 | ||
Shares outstanding | 45,904 | |||
Net assets | $ | 746,004 | ||
8
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 103,767 | ||
Interest | 216 | |||
Securities lending | 29 | |||
Less: Foreign tax withheld | (1,177 | ) | ||
Total investment income | 102,835 | |||
Expenses: | ||||
Investment management fees | 21,458 | |||
Administrative services fees | 23 | |||
Transfer agent fees | 6,732 | |||
Distribution fees | ||||
Class A | 5,304 | |||
Class B | 1,957 | |||
Class C | 2,095 | |||
Class R3 | 11 | |||
Class R4 | 29 | |||
Custodian fees | 11 | |||
Accounting services fees | 546 | |||
Registration and filing fees | 317 | |||
Board of Directors’ fees | 84 | |||
Audit fees | 115 | |||
Other expenses | 1,006 | |||
Total expenses (before waivers and fees paid indirectly) | 39,688 | |||
Transfer agent fee waivers | (298 | ) | ||
Commission recapture | (116 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (414 | ) | ||
Total expenses, net | 39,274 | |||
Net Investment Income | 63,561 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (445,265 | ) | ||
Net realized loss on forward foreign currency contracts | (73 | ) | ||
Net realized gain on other foreign currency transactions | 58 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (445,280 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 818,038 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | — | |||
Net Changes in Unrealized Appreciation of Investments | 818,038 | |||
Net Gain on Investments and Foreign Currency Transactions | 372,758 | |||
Net Increase in Net Assets Resulting from Operations | $ | 436,319 | ||
9
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 63,561 | $ | 61,853 | ||||
Net realized loss on investments and foreign currency transactions | (445,280 | ) | (108,309 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 818,038 | (1,479,942 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 436,319 | (1,526,398 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (38,764 | ) | (46,956 | ) | ||||
Class B | (2,014 | ) | (2,208 | ) | ||||
Class C | (2,339 | ) | (2,645 | ) | ||||
Class I | (6,465 | ) | (858 | ) | ||||
Class R3 | (30 | ) | (4 | ) | ||||
Class R4 | (216 | ) | (101 | ) | ||||
Class R5 | (23 | ) | (6 | ) | ||||
Class Y | (12,472 | ) | (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 | (62,323 | ) | (290,863 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 213,045 | * | 270,480 | |||||
Class B | (2,912 | )† | (31,123 | ) | ||||
Class C | 45,365 | ‡ | (6,590 | ) | ||||
Class I | 438,869 | § | 202,564 | |||||
Class R3 | 4,275 | ** | 436 | |||||
Class R4 | 9,227 | †† | 9,375 | |||||
Class R5 | 1,481 | ‡‡ | 258 | |||||
Class Y | 175,641 | §§ | 444,967 | |||||
Net increase from capital share transactions | 884,991 | 890,367 | ||||||
Net Increase (Decrease) In Net Assets | 1,258,987 | (926,894 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 3,330,259 | 4,257,153 | ||||||
End of period | $ | 4,589,246 | $ | 3,330,259 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 5,747 | $ | 4,831 | ||||
* | Includes merger activity in the amount of $304,392. | |
† | Includes merger activity in the amount of $42,346. | |
‡ | Includes merger activity in the amount of $63,542. | |
§ | Includes merger activity in the amount of $404. | |
** | Includes merger activity in the amount of $38. | |
†† | Includes merger activity in the amount of $18. | |
‡‡ | Includes merger activity in the amount of $8. | |
§§ | Includes merger activity in the amount of $13,599. |
10
October 31, 2009
(000’s Omitted)
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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The |
11
October 31, 2009
(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. 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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable |
12
inputs, the valuation of these securities reflects the best available data and management believes the prices are a reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had no outstanding forward foreign currency contracts as of October 31, 2009. | |||
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 quarterly. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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. |
14
k) | Additional Derivative Instrument(s) Information | ||
The volume of derivative activity was minimal during the year ended October 31, 2009. | |||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | (73 | ) | $ | — | $ | (73 | ) | ||||||||||
Total | $ | — | $ | — | $ | — | $ | (73 | ) | $ | — | $ | (73 | ) | ||||||||||
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. |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 62,323 | $ | 81,893 | ||||
Long-Term Capital Gains * | — | 208,970 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 5,748 | ||
Accumulated Capital Losses * | (680,308 | ) | ||
Unrealized Appreciation † | 222,509 | |||
Total Accumulated Deficit | $ | (452,051 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease undistributed net investment income by $322, increase accumulated net realized gain on investments by $280,855, and decrease paid-in-capital by $280,533. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2010 | $ | 20,521 | ||
2015 | 95,054 | |||
2016 | 109,157 | |||
2017 | 455,576 | |||
Total | $ | 680,308 | ||
As a result of current or past mergers in the Fund, certain provisions in the Internal Revenue Code may limit the future utilization of capital losses. As of October 31, 2009, the Fund had $280,530 in expired capital loss carryforwards. | |||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
16
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.16 | % | 1.08 | % | 1.09 | % | 1.13 | % | 1.16 | % | ||||||||||
Class B Shares | 1.98 | 1.97 | 1.95 | 1.98 | 2.01 | |||||||||||||||
Class C Shares | 1.92 | 1.83 | 1.82 | 1.86 | 1.88 | |||||||||||||||
Class I Shares | 0.85 | 0.81 | 0.76 | 0.98 | * | |||||||||||||||
Class R3 Shares | 1.47 | 1.50 | 1.40 | † | ||||||||||||||||
Class R4 Shares | 1.09 | 1.09 | 1.09 | † | ||||||||||||||||
Class R5 Shares | 0.80 | 0.79 | 0.82 | † | ||||||||||||||||
Class Y Shares | 0.69 | 0.68 | 0.68 | 0.70 | 0.72 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006. | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007. |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $9,717 and contingent deferred sales charges of $402 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $120. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was in the amount of $9. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $5,923 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
18
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 | % | 16.17 | % | ||||
Class B | 0.03 | 15.19 | ||||||
Class C | 0.03 | 15.39 | ||||||
Class I | 0.03 | 16.64 | ||||||
Class Y | 0.03 | 16.65 |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 2,177,489 | ||
Sales Proceeds Excluding U.S. Government Obligations | 1,326,063 |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
For the Year Ended October 31, 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 | 30,549 | 2,720 | (40,277 | ) | 19,330 | 12,322 | 28,976 | 10,493 | (27,322 | ) | — | 12,147 | ||||||||||||||||||||||||||||
Amount | $ | 429,482 | $ | 37,971 | $ | (558,800 | ) | $ | 304,392 | $ | 213,045 | $ | 556,608 | $ | 216,318 | $ | (502,446 | ) | $ | — | $ | 270,480 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,753 | 144 | (5,214 | ) | 2,734 | (583 | ) | 1,813 | 1,117 | (4,749 | ) | — | (1,819 | ) | ||||||||||||||||||||||||||
Amount | $ | 23,733 | $ | 1,952 | $ | (70,943 | ) | $ | 42,346 | $ | (2,912 | ) | $ | 34,327 | $ | 22,868 | $ | (88,318 | ) | $ | — | $ | (31,123 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,756 | 158 | (4,337 | ) | 4,111 | 2,688 | 2,241 | 1,031 | (3,824 | ) | — | (552 | ) | |||||||||||||||||||||||||||
Amount | $ | 37,753 | $ | 2,145 | $ | (58,075 | ) | $ | 63,542 | $ | 45,365 | $ | 41,699 | $ | 21,027 | $ | (69,316 | ) | $ | — | $ | (6,590 | ) | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 33,036 | 442 | (3,855 | ) | 26 | 29,649 | 11,984 | 51 | (546 | ) | — | 11,489 | ||||||||||||||||||||||||||||
Amount | $ | 486,500 | $ | 6,336 | $ | (54,371 | ) | $ | 404 | $ | 438,869 | $ | 210,565 | $ | 952 | $ | (8,953 | ) | $ | — | $ | 202,564 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 313 | 2 | (28 | ) | 2 | 289 | 30 | — | (7 | ) | — | 23 | ||||||||||||||||||||||||||||
Amount | $ | 4,603 | $ | 30 | $ | (396 | ) | $ | 38 | $ | 4,275 | $ | 569 | $ | 13 | $ | (146 | ) | $ | — | $ | 436 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 782 | 15 | (175 | ) | 1 | 623 | 525 | 10 | (49 | ) | — | 486 | ||||||||||||||||||||||||||||
Amount | $ | 11,571 | $ | 216 | $ | (2,578 | ) | $ | 18 | $ | 9,227 | $ | 10,068 | $ | 208 | $ | (901 | ) | $ | — | $ | 9,375 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 109 | 2 | (13 | ) | 1 | 99 | 14 | 1 | (2 | ) | — | 13 | ||||||||||||||||||||||||||||
Amount | $ | 1,634 | $ | 23 | $ | (184 | ) | $ | 8 | $ | 1,481 | $ | 279 | $ | 16 | $ | (37 | ) | $ | — | $ | 258 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 14,601 | 855 | (3,893 | ) | 852 | 12,415 | 23,180 | 1,110 | (1,697 | ) | — | 22,593 | ||||||||||||||||||||||||||||
Amount | $ | 204,099 | $ | 12,209 | $ | (54,266 | ) | $ | 13,599 | $ | 175,641 | $ | 449,513 | $ | 22,787 | $ | (27,333 | ) | $ | — | $ | 444,967 |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 952 | $ | 13,512 | |||||
For the Year Ended October 31, 2008 | 654 | $ | 12,822 |
20
Net assets of | ||||||||||||||||||||
Acquiring Fund | Net assets of | Acquiring | ||||||||||||||||||
Net assets of Target | shares issued to the | Acquiring Fund | Fund | |||||||||||||||||
Fund on Merger | Target Fund shares | Target Fund’s | immediately before | immediately | ||||||||||||||||
Date | exchanged | shareholders | merger | after merger | ||||||||||||||||
Class A | $ | 304,392 | 18,898 | 19,330 | $ | 2,304,138 | $ | 2,608,530 | ||||||||||||
Class B | 42,346 | 2,814 | 2,734 | 196,894 | 239,240 | |||||||||||||||
Class C | 63,542 | 4,207 | 4,111 | 220,582 | 284,124 | |||||||||||||||
Class I | 404 | 25 | 26 | 588,983 | 589,387 | |||||||||||||||
Class R3 | 38 | 2 | 2 | 4,261 | 4,299 | |||||||||||||||
Class R4 | 18 | 1 | 1 | 17,161 | 17,179 | |||||||||||||||
Class R5 | 8 | — | 1 | 1,538 | 1,546 | |||||||||||||||
Class Y | 13,599 | 813 | 852 | 714,649 | 728,248 | |||||||||||||||
Total | $ | 424,347 | 26,760 | 27,057 | $ | 4,048,206 | $ | 4,472,553 |
Unrealized Appreciation | Accumulated Net | |||||||||||
Fund | (Depreciation) | Realized Gains (Losses) | Capital Stock | |||||||||
Target Fund | $ | 11,295 | $ | (441,651 | ) | $ | 854,703 |
21
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 14.56 | $ | 0.26 | $ | — | $ | 1.47 | $ | 1.73 | $ | (0.26 | ) | $ | — | $ | — | $ | (0.26 | ) | $ | 1.47 | $ | 16.03 | ||||||||||||||||||||
B | 14.32 | 0.14 | — | 1.44 | 1.58 | (0.14 | ) | — | — | (0.14 | ) | 1.44 | 15.76 | |||||||||||||||||||||||||||||||
C | 14.28 | 0.15 | — | 1.45 | 1.60 | (0.16 | ) | — | — | (0.16 | ) | 1.44 | 15.72 | |||||||||||||||||||||||||||||||
I | 14.52 | 0.33 | — | 1.44 | 1.77 | (0.31 | ) | — | — | (0.31 | ) | 1.46 | 15.98 | |||||||||||||||||||||||||||||||
R3 | 14.71 | 0.25 | — | 1.46 | 1.71 | (0.24 | ) | — | — | (0.24 | ) | 1.47 | 16.18 | |||||||||||||||||||||||||||||||
R4 | 14.73 | 0.28 | — | 1.48 | 1.76 | (0.27 | ) | — | — | (0.27 | ) | 1.49 | 16.22 | |||||||||||||||||||||||||||||||
R5 | 14.75 | 0.33 | — | 1.47 | 1.80 | (0.31 | ) | — | — | (0.31 | ) | 1.49 | 16.24 | |||||||||||||||||||||||||||||||
Y | 14.75 | 0.35 | — | 1.48 | 1.83 | (0.33 | ) | — | — | (0.33 | ) | 1.50 | 16.25 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 22.76 | 0.14 | — | (7.21 | ) | (7.07 | ) | (0.13 | ) | (1.24 | ) | — | (1.37 | ) | (8.44 | ) | 14.32 | |||||||||||||||||||||||||||
C | 22.72 | 0.17 | — | (7.21 | ) | (7.04 | ) | (0.16 | ) | (1.24 | ) | — | (1.40 | ) | (8.44 | ) | 14.28 | |||||||||||||||||||||||||||
I | 23.07 | 0.34 | — | (7.27 | ) | (6.93 | ) | (0.38 | ) | (1.24 | ) | — | (1.62 | ) | (8.55 | ) | 14.52 | |||||||||||||||||||||||||||
R3 | 23.37 | 0.23 | — | (7.40 | ) | (7.17 | ) | (0.25 | ) | (1.24 | ) | — | (1.49 | ) | (8.66 | ) | 14.71 | |||||||||||||||||||||||||||
R4 | 23.39 | 0.32 | — | (7.42 | ) | (7.10 | ) | (0.32 | ) | (1.24 | ) | — | (1.56 | ) | (8.66 | ) | 14.73 | |||||||||||||||||||||||||||
R5 | 23.41 | 0.35 | — | (7.40 | ) | (7.05 | ) | (0.37 | ) | (1.24 | ) | — | (1.61 | ) | (8.66 | ) | 14.75 | |||||||||||||||||||||||||||
Y | 23.41 | 0.37 | — | (7.40 | ) | (7.03 | ) | (0.39 | ) | (1.24 | ) | — | (1.63 | ) | (8.66 | ) | 14.75 | |||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 21.17 | 0.11 | 0.01 | 2.90 | 3.02 | (0.09 | ) | (1.34 | ) | — | (1.43 | ) | 1.59 | 22.76 | ||||||||||||||||||||||||||||||
C | 21.13 | 0.13 | 0.01 | 2.91 | 3.05 | (0.12 | ) | (1.34 | ) | — | (1.46 | ) | 1.59 | 22.72 | ||||||||||||||||||||||||||||||
I | 21.46 | 0.36 | — | 2.98 | 3.34 | (0.39 | ) | (1.34 | ) | — | (1.73 | ) | 1.61 | 23.07 | ||||||||||||||||||||||||||||||
R3(g) | 21.14 | 0.15 | — | 2.25 | 2.40 | (0.17 | ) | — | — | (0.17 | ) | 2.23 | 23.37 | |||||||||||||||||||||||||||||||
R4(g) | 21.14 | 0.21 | — | 2.26 | 2.47 | (0.22 | ) | — | — | (0.22 | ) | 2.25 | 23.39 | |||||||||||||||||||||||||||||||
R5(g) | 21.14 | 0.26 | — | 2.26 | 2.52 | (0.25 | ) | — | — | (0.25 | ) | 2.27 | 23.41 | |||||||||||||||||||||||||||||||
Y | 21.72 | 0.37 | — | 3.02 | 3.39 | (0.36 | ) | (1.34 | ) | — | (1.70 | ) | 1.69 | 23.41 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 (j) | ||||||||||||||||||||||||||||||||||||||||||||
A | 19.10 | 0.26 | — | 3.14 | 3.40 | (0.26 | ) | (0.76 | ) | — | (1.02 | ) | 2.38 | 21.48 | ||||||||||||||||||||||||||||||
B | 18.84 | 0.09 | — | 3.10 | 3.19 | (0.10 | ) | (0.76 | ) | — | (0.86 | ) | 2.33 | 21.17 | ||||||||||||||||||||||||||||||
C | 18.81 | 0.12 | — | 3.08 | 3.20 | (0.12 | ) | (0.76 | ) | — | (0.88 | ) | 2.32 | 21.13 | ||||||||||||||||||||||||||||||
I(k) | 20.48 | 0.03 | — | 1.03 | 1.06 | (0.08 | ) | — | — | (0.08 | ) | 0.98 | 21.46 | |||||||||||||||||||||||||||||||
Y | 19.30 | 0.35 | — | 3.18 | 3.53 | (0.35 | ) | (0.76 | ) | — | (1.11 | ) | 2.42 | 21.72 | ||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 17.56 | 0.08 | — | 1.48 | 1.56 | (0.09 | ) | (0.19 | ) | — | (0.28 | ) | 1.28 | 18.84 | ||||||||||||||||||||||||||||||
C | 17.53 | 0.10 | — | 1.48 | 1.58 | (0.11 | ) | (0.19 | ) | — | (0.30 | ) | 1.28 | 18.81 | ||||||||||||||||||||||||||||||
Y | 17.97 | 0.32 | — | 1.53 | 1.85 | (0.33 | ) | (0.19 | ) | — | (0.52 | ) | 1.33 | 19.30 |
(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) | During the year ended October 31, 2009, The Hartford Dividend and Growth Fund incurred $236.4 million in sales associated with the transition of assets from The Hartford Stock Fund, which merged into the Fund on October 2, 2009. These sales are excluded from the portfolio turnover rate calculation. | |
(f) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Not annualized. | |
(i) | Annualized. | |
(j) | Per share amounts have been calculated using average shares outstanding method. | |
(k) | Commenced operations on August 31, 2006. |
22
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||
12.17 | % | $ | 2,635,571 | 1.17 | % | 1.17 | % | 1.17 | % | 1.88 | % | 33 | %(e) | |||||||||||||||
11.22 | 236,026 | 2.14 | 1.99 | 1.99 | 1.10 | — | ||||||||||||||||||||||
11.37 | 286,465 | 1.92 | 1.92 | 1.92 | 1.13 | — | ||||||||||||||||||||||
12.52 | 658,690 | 0.85 | 0.85 | 0.85 | 1.96 | — | ||||||||||||||||||||||
11.84 | 5,171 | 1.47 | 1.47 | 1.47 | 1.26 | — | ||||||||||||||||||||||
12.27 | 19,372 | 1.09 | 1.09 | 1.09 | 1.85 | — | ||||||||||||||||||||||
12.55 | 1,947 | 0.80 | 0.80 | 0.80 | 2.07 | — | ||||||||||||||||||||||
12.73 | 746,004 | 0.69 | 0.69 | 0.69 | 2.30 | — | ||||||||||||||||||||||
(32.24 | ) | 2,214,358 | 1.09 | 1.09 | 1.09 | 1.62 | 36 | |||||||||||||||||||||
(32.85 | ) | 222,732 | 1.97 | 1.97 | 1.97 | 0.73 | — | |||||||||||||||||||||
(32.80 | ) | 221,895 | 1.83 | 1.83 | 1.83 | 0.87 | — | |||||||||||||||||||||
(32.02 | ) | 167,989 | 0.82 | 0.82 | 0.82 | 1.77 | — | |||||||||||||||||||||
(32.53 | ) | 455 | 1.58 | 1.50 | 1.50 | 1.16 | — | |||||||||||||||||||||
(32.25 | ) | 8,410 | 1.09 | 1.09 | 1.09 | 1.63 | — | |||||||||||||||||||||
(32.06 | ) | 310 | 0.80 | 0.80 | 0.80 | 1.94 | — | |||||||||||||||||||||
(31.99 | ) | 494,110 | 0.69 | 0.69 | 0.69 | 2.01 | — | |||||||||||||||||||||
16.20 | (f) | 3,236,757 | 1.09 | 1.09 | 1.09 | 1.35 | 24 | |||||||||||||||||||||
15.22 | (f) | 395,552 | 1.95 | 1.95 | 1.95 | 0.50 | — | |||||||||||||||||||||
15.42 | (f) | 365,443 | 1.82 | 1.82 | 1.82 | 0.62 | — | |||||||||||||||||||||
16.67 | (f) | 1,899 | 0.77 | 0.77 | 0.77 | 1.50 | — | |||||||||||||||||||||
11.38 | (h) | 177 | 1.40 | (i) | 1.40 | (i) | 1.40 | (i) | 0.63 | (i) | — | |||||||||||||||||
11.70 | (h) | 1,994 | 1.09 | (i) | 1.09 | (i) | 1.09 | (i) | 0.72 | (i) | — | |||||||||||||||||
11.99 | (h) | 193 | 0.82 | (i) | 0.82 | (i) | 0.82 | (i) | 0.98 | (i) | — | |||||||||||||||||
16.68 | (f) | 255,138 | 0.69 | 0.69 | 0.69 | 1.72 | — | |||||||||||||||||||||
18.63 | 2,626,634 | 1.14 | 1.14 | 1.14 | 1.32 | 29 | ||||||||||||||||||||||
17.63 | 365,678 | 1.99 | 1.99 | 1.99 | 0.48 | — | ||||||||||||||||||||||
17.75 | 317,139 | 1.87 | 1.87 | 1.87 | 0.60 | — | ||||||||||||||||||||||
5.20 | (h) | 11 | 1.08 | (i) | 0.98 | (i) | 0.98 | (i) | 0.59 | (i) | — | |||||||||||||||||
19.15 | 133,376 | 0.71 | 0.71 | 0.71 | 1.75 | — | ||||||||||||||||||||||
9.87 | 2,109,617 | 1.17 | 1.17 | 1.17 | 1.25 | 26 | ||||||||||||||||||||||
8.92 | 343,650 | 2.01 | 2.01 | 2.01 | 0.41 | — | ||||||||||||||||||||||
9.08 | 280,967 | 1.89 | 1.89 | 1.89 | 0.54 | — | ||||||||||||||||||||||
10.36 | 114,777 | 0.73 | 0.73 | 0.73 | 1.64 | — |
23
of The Hartford Mutual Funds, Inc.
December 15, 2009
24
25
Directors and Officers (Unaudited) — (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 - 2009). |
26
27
DRD* | 100.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.262 | N/A | N/A | 0.262 | ||||||||||||
Class B | 0.143 | N/A | N/A | 0.143 | ||||||||||||
Class C | 0.158 | N/A | N/A | 0.158 | ||||||||||||
Class I | 0.309 | N/A | N/A | 0.309 | ||||||||||||
Class R3 | 0.235 | N/A | N/A | 0.235 | ||||||||||||
Class R4 | 0.274 | N/A | N/A | 0.274 | ||||||||||||
Class R5 | 0.313 | N/A | N/A | 0.313 | ||||||||||||
Class Y | 0.327 | N/A | N/A | 0.327 |
28
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,198.20 | $ | 6.37 | $ | 1,000.00 | $ | 1,019.41 | $ | 5.85 | 1.15 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,192.80 | $ | 10.89 | $ | 1,000.00 | $ | 1,015.27 | $ | 10.01 | 1.97 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,193.00 | $ | 10.50 | $ | 1,000.00 | $ | 1,015.63 | $ | 9.65 | 1.90 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,200.00 | $ | 4.66 | $ | 1,000.00 | $ | 1,020.97 | $ | 4.28 | 0.84 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,196.40 | $ | 8.08 | $ | 1,000.00 | $ | 1,017.85 | $ | 7.43 | 1.46 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,198.40 | $ | 5.98 | $ | 1,000.00 | $ | 1,019.76 | $ | 5.50 | 1.08 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,199.80 | $ | 4.38 | $ | 1,000.00 | $ | 1,021.22 | $ | 4.02 | 0.79 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,200.30 | $ | 3.77 | $ | 1,000.00 | $ | 1,021.78 | $ | 3.47 | 0.68 | 184 | 365 |
29
30
31
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
32
33
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
Equity Growth Allocation A# | 15.20 | % | 1.37 | % | 1.96 | % | ||||||
Equity Growth Allocation A## | 8.87 | % | 0.23 | % | 0.90 | % | ||||||
Equity Growth Allocation B# | 14.51 | % | 0.69 | % | 1.27 | % | ||||||
Equity Growth Allocation B## | 9.51 | % | 0.33 | % | 1.11 | % | ||||||
Equity Growth Allocation C# | 14.33 | % | 0.66 | % | 1.25 | % | ||||||
Equity Growth Allocation C## | 13.33 | % | 0.66 | % | 1.25 | % | ||||||
Equity Growth Allocation I# | 15.77 | % | 1.61 | % | 2.18 | % | ||||||
Equity Growth Allocation R3# | 15.05 | % | 1.24 | % | 1.84 | % | ||||||
Equity Growth Allocation R4# | 15.40 | % | 1.42 | % | 2.00 | % | ||||||
Equity Growth Allocation R5# | 15.73 | % | 1.57 | % | 2.15 | % | ||||||
S&P 500 Index | 9.78 | % | 0.33 | % | 0.59 | % |
# | 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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 2.6 | % | ||
SPDR DJ Wilshire REIT ETF | 0.5 | |||
The Hartford Capital Appreciation Fund, Class Y | 16.9 | |||
The Hartford Capital Appreciation II Fund, Class Y | 2.0 | |||
The Hartford Disciplined Equity Fund, Class Y | 6.0 | |||
The Hartford Dividend and Growth Fund, Class Y | 1.3 | |||
The Hartford Equity Income Fund, Class Y | 2.4 | |||
The Hartford Fundamental Growth Fund, Class Y | 1.3 | |||
The Hartford Global Equity Fund, Class Y | 0.0 | |||
The Hartford Global Growth Fund, Class Y | 5.1 | |||
The Hartford Growth Fund, Class Y | 1.9 | |||
The Hartford Growth Opportunities Fund, Class Y | 7.8 | |||
The Hartford International Opportunities Fund, Class Y | 9.5 | |||
The Hartford International Small Company Fund, Class Y | 5.7 | |||
The Hartford MidCap Fund, Class Y | 0.4 | |||
The Hartford MidCap Growth Fund, Class Y | 0.3 | |||
The Hartford MidCap Value Fund, Class Y | 0.3 | |||
The Hartford Select MidCap Value Fund, Class Y | 2.0 | |||
The Hartford Select SmallCap Value Fund, Class Y | 7.4 | |||
The Hartford Small Company Fund, Class Y | 7.2 | |||
The Hartford Value Fund, Class Y | 19.0 | |||
The Hartford Value Opportunities Fund, Class Y | 0.4 | |||
Other Assets and Liabilities | 0.0 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 96.9% | ||||||||||||
EQUITY FUNDS - 96.9% | ||||||||||||
1,203 | The Hartford Capital Appreciation Fund, Class Y | $ | 36,373 | |||||||||
394 | The Hartford Capital Appreciation II Fund, Class Y • | 4,318 | ||||||||||
1,213 | The Hartford Disciplined Equity Fund, Class Y | 13,053 | ||||||||||
171 | The Hartford Dividend and Growth Fund, Class Y | 2,772 | ||||||||||
476 | The Hartford Equity Income Fund, Class Y | 5,142 | ||||||||||
288 | The Hartford Fundamental Growth Fund, Class Y • | 2,709 | ||||||||||
11 | The Hartford Global Equity Fund, Class Y | 90 | ||||||||||
820 | The Hartford Global Growth Fund, Class Y • | 10,919 | ||||||||||
296 | The Hartford Growth Fund, Class Y • | 4,187 | ||||||||||
782 | The Hartford Growth Opportunities Fund, Class Y • | 16,876 | ||||||||||
1,563 | The Hartford International Opportunities Fund, Class Y | 20,426 | ||||||||||
1,132 | The Hartford International Small Company Fund, Class Y | 12,330 | ||||||||||
54 | The Hartford MidCap Fund, Class Y • | 959 | ||||||||||
89 | The Hartford MidCap Growth Fund, Class Y • | 683 | ||||||||||
81 | The Hartford MidCap Value Fund, Class Y | 712 | ||||||||||
561 | The Hartford Select MidCap Value Fund, Class Y | 4,311 | ||||||||||
1,994 | The Hartford Select SmallCap Value Fund, Class Y | 15,868 | ||||||||||
1,038 | The Hartford Small Company Fund, Class Y • | 15,597 | ||||||||||
4,293 | The Hartford Value Fund, Class Y | 40,996 | ||||||||||
77 | The Hartford Value Opportunities Fund, Class Y | 810 | ||||||||||
Total equity funds (cost $242,879) | $ | 209,131 | ||||||||||
Total investments in affiliated investment companies (cost $242,879) | $ | 209,131 | ||||||||||
EXCHANGE TRADED FUNDS — 3.1% | ||||||||||||
160 | SPDR DJ Wilshire International Real Estate ETF | $ | 5,533 | |||||||||
24 | SPDR DJ Wilshire REIT ETF . | 1,050 | ||||||||||
Total exchange traded funds (cost $6,404) | $ | 6,583 | ||||||||||
Total long-term investments (cost $249,283) | $ | 215,714 | ||||||||||
Total investments (cost $249,283) ▲ | 100.0 | % | $ | 215,714 | ||||||||
Other assets and liabilities | — | % | 48 | |||||||||
Total net assets | 100.0 | % | $ | 215,762 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $250,277 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 2,639 | ||
Unrealized Depreciation | (37,202 | ) | ||
Net Unrealized Depreciation | $ | (34,563 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 209,131 | $ | 209,131 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 6,583 | 6,583 | — | — | ||||||||||||
Total | $ | 215,714 | $ | 215,714 | $ | — | $ | — | ||||||||
5
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $6,404) | $ | 6,583 | ||
Investments in underlying affiliated funds, at market value (cost $242,879) | 209,131 | |||
Receivables: | ||||
Investment securities sold | 286 | |||
Fund shares sold | 337 | |||
Dividends and interest | — | |||
Other assets | 55 | |||
Total assets | 216,392 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 533 | |||
Investment management fees | 5 | |||
Distribution fees | 19 | |||
Accrued expenses | 73 | |||
Total liabilities | 630 | |||
Net assets | $ | 215,762 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 281,821 | |||
Accumulated undistributed net investment income | 312 | |||
Accumulated net realized loss on investments | (32,802 | ) | ||
Unrealized depreciation of investments | (33,569 | ) | ||
Net assets | $ | 215,762 | ||
Shares authorized | 400,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 9.35/ $9.89 | ||
Shares outstanding | 13,219 | |||
Net assets | $ | 123,640 | ||
Class B: Net asset value per share | $ | 9.27 | ||
Shares outstanding | 3,252 | |||
Net assets | $ | 30,159 | ||
Class C: Net asset value per share | $ | 9.23 | ||
Shares outstanding | 5,439 | |||
Net assets | $ | 50,218 | ||
Class I: Net asset value per share | $ | 9.36 | ||
Shares outstanding | 67 | |||
Net assets | $ | 626 | ||
Class R3: Net asset value per share | $ | 9.31 | ||
Shares outstanding | 100 | |||
Net assets | $ | 933 | ||
Class R4: Net asset value per share | $ | 9.32 | ||
Shares outstanding | 481 | |||
Net assets | $ | 4,482 | ||
Class R5: Net asset value per share | $ | 9.36 | ||
Shares outstanding | 609 | |||
Net assets | $ | 5,704 | ||
6
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 259 | ||
Dividends from underlying affiliated funds | 3,522 | |||
Interest | 1 | |||
Total investment income | 3,782 | |||
Expenses: | ||||
Investment management fees | 293 | |||
Administrative services fees | 11 | |||
Transfer agent fees | 574 | |||
Distribution fees | ||||
Class A | 277 | |||
Class B | 268 | |||
Class C | 466 | |||
Class R3 | 4 | |||
Class R4 | 9 | |||
Custodian fees | 1 | |||
Accounting services fees | 23 | |||
Registration and filing fees | 84 | |||
Board of Directors’ fees | 7 | |||
Audit fees | 11 | |||
Other expenses | 64 | |||
Total expenses (before waivers) | 2,092 | |||
Expense waivers | (161 | ) | ||
Transfer agent fee waivers | (35 | ) | ||
Total waivers | (196 | ) | ||
Total expenses, net | 1,896 | |||
Net Investment Income | 1,886 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (32,555 | ) | ||
Net realized loss on investments in securities | (13 | ) | ||
Net Realized Loss on Investments | (32,568 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 60,407 | |||
Net Changes in Unrealized Appreciation of Investments | 60,407 | |||
Net Gain on Investments | 27,839 | |||
Net Increase in Net Assets Resulting from Operations | $ | 29,725 | ||
7
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | 1,886 | $ | (667 | ) | |||
Net realized gain (loss) on investments | (32,568 | ) | 13,299 | |||||
Net unrealized appreciation (depreciation) of investments | 60,407 | (145,028 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 29,725 | (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 | (4,007 | ) | 34,133 | |||||
Class B | (1,584 | ) | 5,149 | |||||
Class C | (177 | ) | 9,733 | |||||
Class I | (1,377 | ) | 901 | |||||
Class R3 | 134 | 283 | ||||||
Class R4 | 1,476 | 3,306 | ||||||
Class R5 | 3,276 | 2,210 | ||||||
Net increase (decrease) from capital share transactions | (2,259 | ) | 55,715 | |||||
Net Increase (Decrease) In Net Assets | 23,943 | (104,899 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 191,819 | 296,718 | ||||||
End of period | $ | 215,762 | $ | 191,819 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 312 | $ | — | ||||
8
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six portfolios. Financial statements for The Hartford Equity 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 were 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 (See note below regarding the closing of Class B shares). 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 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 September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 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 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. |
9
October 31, 2009
(000’s Omitted)
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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. | ||
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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. 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 Valuation Time. 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 are 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable representation of exit price. |
10
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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may use 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 October 31, 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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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 (“RIC”) under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially |
11
October 31, 2009
(000’s Omitted)
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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) - Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings - 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 1,575 | $ | 9,945 | ||||
Long-Term Capital Gains * | 1,948 | 18,273 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 312 | ||
Accumulated Capital Losses * | (31,808 | ) | ||
Unrealized Depreciation † | (34,563 | ) | ||
Total Accumulated Deficit | $ | (66,059 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts - The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase accumulated undistributed net investment income by $1 and decrease accumulated net realized loss on investments by $1. |
12
e) | Capital Loss Carryforward - At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2017 | $ | 31,808 | ||
Total | $ | 31,808 | ||
f) | Accounting for Uncertainty in Income Taxes - Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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. |
13
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $622 and contingent deferred sales charges of $93 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 year ended October 31, 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. | |||
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $550 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 50,707 | ||
Sales Proceeds Excluding U.S. Government Obligations | 54,809 |
14
6. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 3,193 | 291 | (3,901 | ) | — | (417 | ) | 3,894 | 1,191 | (2,598 | ) | — | 2,487 | |||||||||||||||||||||||||||
Amount | $ | 25,003 | $ | 2,116 | $ | (31,126 | ) | $ | — | $ | (4,007 | ) | $ | 47,768 | $ | 16,355 | $ | (29,990 | ) | $ | — | $ | 34,133 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 394 | 39 | (639 | ) | — | (206 | ) | 629 | 301 | (571 | ) | — | 359 | |||||||||||||||||||||||||||
Amount | $ | 3,035 | $ | 275 | $ | (4,894 | ) | $ | — | $ | (1,584 | ) | $ | 7,627 | $ | 4,107 | $ | (6,585 | ) | $ | — | $ | 5,149 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,806 | 78 | (2,966 | ) | — | (82 | ) | 1,479 | 432 | (1,200 | ) | — | 711 | |||||||||||||||||||||||||||
Amount | $ | 21,077 | $ | 556 | $ | (21,810 | ) | $ | — | $ | (177 | ) | $ | 17,894 | $ | 5,883 | $ | (14,044 | ) | $ | — | $ | 9,733 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,667 | 42 | (2,722 | ) | — | (13 | ) | 82 | — | (6 | ) | — | 76 | |||||||||||||||||||||||||||
Amount | $ | 19,323 | $ | 312 | $ | (21,012 | ) | $ | — | $ | (1,377 | ) | $ | 942 | $ | 8 | $ | (49 | ) | $ | — | $ | 901 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 38 | 2 | (25 | ) | — | 15 | 29 | 7 | (12 | ) | — | 24 | ||||||||||||||||||||||||||||
Amount | $ | 335 | $ | 12 | $ | (213 | ) | $ | — | $ | 134 | $ | 341 | $ | 88 | $ | (146 | ) | $ | — | $ | 283 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 288 | 8 | (104 | ) | — | 192 | 302 | 7 | (49 | ) | — | 260 | ||||||||||||||||||||||||||||
Amount | $ | 2,219 | $ | 59 | $ | (802 | ) | $ | — | $ | 1,476 | $ | 3,761 | $ | 87 | $ | (542 | ) | $ | — | $ | 3,306 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 521 | 9 | (105 | ) | — | 425 | 196 | 1 | (18 | ) | — | 179 | ||||||||||||||||||||||||||||
Amount | $ | 4,027 | $ | 67 | $ | (818 | ) | $ | — | $ | 3,276 | $ | 2,367 | $ | 8 | $ | (165 | ) | $ | — | $ | 2,210 |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 37 | $ | 290 | |||||
For the Year Ended October 31, 2008 | 32 | $ | 385 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
8. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.29 | $ | 0.08 | $ | — | $ | 1.14 | $ | 1.22 | $ | (0.08 | ) | $ | (0.08 | ) | $ | — | $ | (0.16 | ) | $ | 1.06 | $ | 9.35 | |||||||||||||||||||
B | 8.19 | 0.03 | — | 1.13 | 1.16 | — | (0.08 | ) | — | (0.08 | ) | 1.08 | 9.27 | |||||||||||||||||||||||||||||||
C | 8.19 | 0.04 | — | 1.10 | 1.14 | (0.02 | ) | (0.08 | ) | — | (0.10 | ) | 1.04 | 9.23 | ||||||||||||||||||||||||||||||
I | 8.31 | 0.89 | — | 0.36 | 1.25 | (0.12 | ) | (0.08 | ) | — | (0.20 | ) | 1.05 | 9.36 | ||||||||||||||||||||||||||||||
R3 | 8.25 | 0.06 | — | 1.14 | 1.20 | (0.06 | ) | (0.08 | ) | — | (0.14 | ) | 1.06 | 9.31 | ||||||||||||||||||||||||||||||
R4 | 8.27 | 0.07 | — | 1.15 | 1.22 | (0.09 | ) | (0.08 | ) | — | (0.17 | ) | 1.05 | 9.32 | ||||||||||||||||||||||||||||||
R5 | 8.31 | 0.10 | — | 1.15 | 1.25 | (0.12 | ) | (0.08 | ) | — | (0.20 | ) | 1.05 | 9.36 | ||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 15.40 | (0.09 | ) | — | (5.76 | ) | (5.85 | ) | (0.46 | ) | (0.90 | ) | — | (1.36 | ) | (7.21 | ) | 8.19 | ||||||||||||||||||||||||||
C | 15.39 | (0.08 | ) | — | (5.76 | ) | (5.84 | ) | (0.46 | ) | (0.90 | ) | — | (1.36 | ) | (7.20 | ) | 8.19 | ||||||||||||||||||||||||||
I | 15.59 | (0.03 | ) | — | (5.75 | ) | (5.78 | ) | (0.60 | ) | (0.90 | ) | — | (1.50 | ) | (7.28 | ) | 8.31 | ||||||||||||||||||||||||||
R3 | 15.52 | (0.02 | ) | — | (5.80 | ) | (5.82 | ) | (0.55 | ) | (0.90 | ) | — | (1.45 | ) | (7.27 | ) | 8.25 | ||||||||||||||||||||||||||
R4 | 15.56 | (0.05 | ) | — | (5.75 | ) | (5.79 | ) | (0.60 | ) | (0.90 | ) | — | (1.50 | ) | (7.29 | ) | 8.27 | ||||||||||||||||||||||||||
R5 | 15.60 | (0.03 | ) | — | (5.76 | ) | (5.79 | ) | (0.60 | ) | (0.90 | ) | — | (1.50 | ) | (7.29 | ) | 8.31 | ||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 13.10 | (0.07 | ) | — | 2.81 | 2.74 | (0.16 | ) | (0.28 | ) | — | (0.44 | ) | 2.30 | 15.40 | |||||||||||||||||||||||||||||
C | 13.10 | (0.07 | ) | — | 2.80 | 2.73 | (0.16 | ) | (0.28 | ) | — | (0.44 | ) | 2.29 | 15.39 | |||||||||||||||||||||||||||||
I | 13.22 | 0.19 | — | 2.71 | 2.90 | (0.25 | ) | (0.28 | ) | — | (0.53 | ) | 2.37 | 15.59 | ||||||||||||||||||||||||||||||
R3(f) | 13.24 | (0.05 | ) | — | 2.33 | 2.28 | — | — | — | — | 2.28 | 15.52 | ||||||||||||||||||||||||||||||||
R4(f) | 13.24 | (0.02 | ) | — | 2.34 | 2.32 | — | — | — | — | 2.32 | 15.56 | ||||||||||||||||||||||||||||||||
R5(f) | 13.24 | (0.01 | ) | — | 2.37 | 2.36 | — | — | — | — | 2.36 | 15.60 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 11.37 | �� | (0.12 | ) | — | 1.88 | 1.76 | (0.02 | ) | (0.01 | ) | — | (0.03 | ) | 1.73 | 13.10 | ||||||||||||||||||||||||||||
C | 11.37 | (0.12 | ) | — | 1.88 | 1.76 | (0.02 | ) | (0.01 | ) | — | (0.03 | ) | 1.73 | 13.10 | |||||||||||||||||||||||||||||
I(i) | 12.59 | (0.01 | ) | — | 0.64 | 0.63 | — | — | — | — | 0.63 | 13.22 | ||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.38 | (0.02 | ) | — | 1.12 | 1.10 | (0.02 | ) | — | — | (0.02 | ) | 1.08 | 11.46 | ||||||||||||||||||||||||||||||
B | 10.35 | (0.08 | ) | — | 1.10 | 1.02 | — | — | — | — | 1.02 | 11.37 | ||||||||||||||||||||||||||||||||
C | 10.35 | (0.07 | ) | — | 1.09 | 1.02 | — | — | — | — | 1.02 | 11.37 |
(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) | Commenced operations on December 22, 2006. | |
(g) | Not annualized. | |
(h) | Annualized. | |
(i) | Commenced operations on August 31, 2006. |
16
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||
15.20% | $ | 123,640 | 0.79 | % | 0.72 | % | 0.72 | % | 1.03 | % | 26 | % | ||||||||||||
14.51 | 30,159 | 1.68 | 1.34 | 1.34 | 0.41 | — | ||||||||||||||||||
14.33 | 50,218 | 1.53 | 1.47 | 1.47 | 0.56 | — | ||||||||||||||||||
15.77 | 626 | 0.28 | 0.28 | 0.28 | 9.91 | — | ||||||||||||||||||
15.05 | 933 | 0.96 | 0.96 | 0.96 | 0.76 | — | ||||||||||||||||||
15.40 | 4,482 | 0.65 | 0.65 | 0.65 | 0.82 | — | ||||||||||||||||||
15.73 | 5,704 | 0.34 | 0.34 | 0.34 | 1.26 | — | ||||||||||||||||||
(40.92) | 113,006 | 0.69 | 0.68 | 0.68 | 0.05 | 10 | ||||||||||||||||||
(41.40) | 28,322 | 1.52 | 1.49 | 1.49 | (0.72 | ) | — | |||||||||||||||||
(41.35) | 45,209 | 1.43 | 1.43 | 1.43 | (0.66 | ) | — | |||||||||||||||||
(40.73) | 668 | 0.30 | 0.30 | 0.30 | (0.29 | ) | — | |||||||||||||||||
(41.10) | 699 | 0.95 | 0.95 | 0.95 | (0.13 | ) | — | |||||||||||||||||
(40.92) | 2,389 | 0.64 | 0.64 | 0.64 | (0.40 | ) | — | |||||||||||||||||
(40.78) | 1,526 | 0.34 | 0.34 | 0.34 | (0.26 | ) | — | |||||||||||||||||
22.39 | 173,379 | 0.69 | 0.69 | 0.69 | (0.06 | ) | 37 | |||||||||||||||||
21.58 | 47,743 | 1.52 | 1.37 | 1.37 | (0.72 | ) | — | |||||||||||||||||
21.50 | 74,047 | 1.42 | 1.37 | 1.37 | (0.72 | ) | — | |||||||||||||||||
22.75 | 64 | 0.39 | 0.37 | 0.37 | (0.15 | ) | — | |||||||||||||||||
17.22 (g) | 952 | 0.97 | (h) | 0.96 | (h) | 0.96 | (h) | (0.91 | ) (h) | — | ||||||||||||||
17.52 (g) | 456 | 0.71 | (h) | 0.69 | (h) | 0.69 | (h) | (0.64 | ) (h) | — | ||||||||||||||
17.82 (g) | 77 | 0.42 | (h) | 0.38 | (h) | 0.38 | (h) | (0.33 | ) (h) | — | ||||||||||||||
16.18 | 116,198 | 0.79 | 0.72 | 0.72 | (0.34 | ) | 14 | |||||||||||||||||
15.43 | 33,295 | 1.62 | 1.37 | 1.37 | (0.93 | ) | — | |||||||||||||||||
15.43 | 51,936 | 1.51 | 1.37 | 1.37 | (0.92 | ) | — | |||||||||||||||||
5.00 (g) | 11 | 0.71 | (h) | 0.48 | (h) | 0.48 | (h) | (0.45 | ) (h) | — | ||||||||||||||
10.60 | 58,087 | 0.85 | 0.68 | 0.68 | (0.43 | ) | 9 | |||||||||||||||||
9.88 | 20,155 | 1.64 | 1.33 | 1.33 | (1.08 | ) | — | |||||||||||||||||
9.88 | 32,718 | 1.53 | 1.34 | 1.34 | (1.08 | ) | — |
17
The Hartford Mutual Funds, Inc.
December 15, 2009
18
19
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
20
21
DRD* | 100.00 | % | ||
QDI† | 100.00 | % | ||
QII‡ | 5.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. | |
‡ | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.072 | N/A | 0.083 | 0.155 | ||||||||||||
Class B | N/A | N/A | 0.083 | 0.083 | ||||||||||||
Class C | 0.020 | N/A | 0.083 | 0.103 | ||||||||||||
Class I | 0.119 | N/A | 0.083 | 0.202 | ||||||||||||
Class R3 | 0.058 | N/A | 0.083 | 0.141 | ||||||||||||
Class R4 | 0.090 | N/A | 0.083 | 0.173 | ||||||||||||
Class R5 | 0.116 | N/A | 0.083 | 0.199 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,217.40 | $ | 4.19 | $ | 1,000.00 | $ | 1,021.42 | $ | 3.82 | 0.75 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,213.40 | $ | 7.75 | $ | 1,000.00 | $ | 1,018.20 | $ | 7.07 | 1.39 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,212.90 | $ | 8.26 | $ | 1,000.00 | $ | 1,017.74 | $ | 7.53 | 1.48 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,220.30 | $ | 1.68 | $ | 1,000.00 | $ | 1,023.69 | $ | 1.53 | 0.30 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,217.00 | $ | 5.42 | $ | 1,000.00 | $ | 1,020.32 | $ | 4.94 | 0.97 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,219.90 | $ | 3.58 | $ | 1,000.00 | $ | 1,021.98 | $ | 3.26 | 0.64 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,220.30 | $ | 1.90 | $ | 1,000.00 | $ | 1,023.49 | $ | 1.73 | 0.34 | 184 | 365 |
23
24
25
26
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
20 | ||||
22 | ||||
23 | ||||
25 | ||||
25 | ||||
26 | ||||
27 | ||||
28 |
growth of capital.
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
Equity Income A# | 6.62 | % | 2.75 | % | 4.55 | % | ||||||
Equity Income A## | 0.75 | % | 1.60 | % | 3.59 | % | ||||||
Equity Income B# | 5.91 | % | 1.92 | % | 3.71 | % | ||||||
Equity Income B## | 0.91 | % | 1.57 | % | 3.71 | % | ||||||
Equity Income C# | 5.85 | % | 2.02 | % | 3.82 | % | ||||||
Equity Income C## | 4.85 | % | 2.02 | % | 3.82 | % | ||||||
Equity Income I# | 6.98 | % | 2.95 | % | 4.71 | % | ||||||
Equity Income R3# | 6.31 | % | 2.75 | % | 4.69 | % | ||||||
Equity Income R4# | 6.58 | % | 2.93 | % | 4.84 | % | ||||||
Equity Income R5# | 6.96 | % | 3.11 | % | 4.98 | % | ||||||
Equity Income Y# | 7.22 | % | 3.20 | % | 5.06 | % | ||||||
Russell 1000 Value Index | 4.78 | % | -0.05 | % | 3.24 | % |
# | 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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||||
Karen H. Grimes, CFA | Ian R. Link, CFA | W. Michael Reckmeyer, III, CFA | ||
Senior Vice President | Vice President | Senior Vice President |
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Banks (Financials) | 6.4 | % | ||
Capital Goods (Industrials) | 11.6 | |||
Commercial & Professional Services (Industrials) | 2.9 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 1.7 | |||
Consumer Services (Consumer Discretionary) | 1.5 | |||
Diversified Financials (Financials) | 8.5 | |||
Energy (Energy) | 17.5 | |||
Food & Staples Retailing (Consumer Staples) | 0.9 | |||
Food, Beverage & Tobacco (Consumer Staples) | 7.1 | |||
Household & Personal Products (Consumer Staples) | 1.9 | |||
Insurance (Financials) | 7.3 | |||
Materials (Materials) | 2.0 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 9.4 | |||
Retailing (Consumer Discretionary) | 5.5 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 3.0 | |||
Software & Services (Information Technology) | 3.1 | |||
Telecommunication Services (Services) | 3.2 | |||
Utilities (Utilities) | 5.9 | |||
Short-Term Investments | 0.8 | |||
Other Assets and Liabilities | (0.2 | ) | ||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 99.4% | ||||||||
Banks — 6.4% | ||||||||
343 | PNC Financial Services Group, Inc. | $ | 16,783 | |||||
161 | Toronto-Dominion Bank ADR | 9,187 | ||||||
890 | Wells Fargo & Co. | 24,487 | ||||||
50,457 | ||||||||
Capital Goods — 11.6% | ||||||||
199 | 3M Co. | 14,670 | ||||||
165 | Caterpillar, Inc. | 9,096 | ||||||
150 | Eaton Corp. | 9,067 | ||||||
815 | General Electric Co. | 11,626 | ||||||
262 | Illinois Tool Works, Inc. | 12,008 | ||||||
283 | Ingersoll-Rand plc | 8,940 | ||||||
237 | PACCAR, Inc. | 8,855 | ||||||
46 | Schneider Electric S.A. | 4,805 | ||||||
273 | Stanley Works | 12,366 | ||||||
91,433 | ||||||||
Commercial & Professional Services — 2.9% | ||||||||
380 | Republic Services, Inc. | 9,836 | ||||||
423 | Waste Management, Inc. | 12,642 | ||||||
22,478 | ||||||||
Consumer Durables & Apparel — 1.7% | ||||||||
72 | Fortune Brands, Inc. | 2,797 | ||||||
256 | Mattel, Inc. | 4,846 | ||||||
74 | V.F. Corp. | 5,236 | ||||||
12,879 | ||||||||
Consumer Services — 1.5% | ||||||||
208 | McDonald’s Corp. | 12,185 | ||||||
Diversified Financials — 8.5% | ||||||||
520 | Bank of America Corp. | 7,580 | ||||||
293 | Bank of New York Mellon Corp. | 7,810 | ||||||
101 | Goldman Sachs Group, Inc. | 17,221 | ||||||
821 | JP Morgan Chase & Co. | 34,297 | ||||||
66,908 | ||||||||
Energy — 17.5% | ||||||||
179 | Baker Hughes, Inc. | 7,514 | ||||||
289 | BP plc ADR | 16,380 | ||||||
421 | Chevron Corp. | 32,200 | ||||||
227 | ConocoPhillips Holding Co. | 11,384 | ||||||
386 | Exxon Mobil Corp. | 27,695 | ||||||
352 | Marathon Oil Corp. | 11,266 | ||||||
252 | Occidental Petroleum Corp. | 19,084 | ||||||
208 | Total S.A. ADR | 12,489 | ||||||
138,012 | ||||||||
Food & Staples Retailing — 0.9% | ||||||||
255 | Sysco Corp. | 6,745 | ||||||
Food, Beverage & Tobacco — 7.1% | ||||||||
479 | Altria Group, Inc. | 8,671 | ||||||
127 | General Mills, Inc. | 8,385 | ||||||
58 | Lorillard, Inc. | 4,492 | ||||||
343 | Nestle S.A. ADR | 15,977 | ||||||
156 | PepsiCo, Inc. | 9,422 | ||||||
189 | Philip Morris International, Inc. | 8,942 | ||||||
55,889 | ||||||||
Household & Personal Products — 1.9% | ||||||||
241 | Kimberly-Clark Corp. | 14,711 | ||||||
Insurance — 7.3% | ||||||||
317 | ACE Ltd. | 16,277 | ||||||
150 | Aflac, Inc. | 6,228 | ||||||
236 | Allstate Corp. | 6,984 | ||||||
266 | Chubb Corp. | 12,914 | ||||||
297 | Marsh & McLennan Cos., Inc. | 6,965 | ||||||
411 | Unum Group | 8,189 | ||||||
57,557 | ||||||||
Materials — 2.0% | ||||||||
270 | E.I. DuPont de Nemours & Co. | 8,588 | ||||||
132 | PPG Industries, Inc. | 7,433 | ||||||
16,021 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 9.4% | ||||||||
149 | GlaxoSmithKline plc ADR | 6,137 | ||||||
353 | Johnson & Johnson | 20,863 | ||||||
768 | Merck & Co., Inc. | 23,751 | ||||||
1,372 | Pfizer, Inc. | 23,360 | ||||||
74,111 | ||||||||
Retailing — 5.5% | ||||||||
384 | Genuine Parts Co. | 13,429 | ||||||
759 | Home Depot, Inc. | 19,036 | ||||||
192 | Sherwin-Williams Co. | 10,969 | ||||||
43,434 | ||||||||
Semiconductors & Semiconductor Equipment — 3.0% | ||||||||
634 | Intel Corp. | 12,110 | ||||||
181 | Maxim Integrated Products, Inc. | 3,015 | ||||||
364 | Texas Instruments, Inc. | 8,543 | ||||||
23,668 | ||||||||
Software & Services — 3.1% | ||||||||
871 | Microsoft Corp. | 24,147 | ||||||
Telecommunication Services — 3.2% | ||||||||
702 | AT&T, Inc. | 18,017 | ||||||
253 | Verizon Communications, Inc. | 7,482 | ||||||
25,499 | ||||||||
Utilities — 5.9% | ||||||||
235 | American Electric Power Co., Inc. | 7,108 | ||||||
309 | Dominion Resources, Inc. | 10,524 | ||||||
91 | Edison International | 2,908 | ||||||
79 | Entergy Corp. | 6,076 | ||||||
51 | Exelon Corp. | 2,386 | ||||||
261 | FPL Group, Inc. | 12,792 | ||||||
222 | Northeast Utilities | 5,124 | ||||||
46,918 | ||||||||
Total common stocks (cost $790,881) | $ | 783,052 | ||||||
Total long-term investments (cost $790,881) | $ | 783,052 | ||||||
SHORT-TERM INVESTMENTS — 0.8% | ||||||||
Repurchase Agreements — 0.8% | ||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $269, collateralized by GNMA 5.00%, 2039, value of $275) | ||||||||
$ | 269 | 0.08%, 10/30/2009 | $ | 269 |
4
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS — 0.8% — (continued) | ||||||||||||
Repurchase Agreements — 0.8% — (continued) | ||||||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,578, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $1,610) | ||||||||||||
$ | 1,578 | 0.08%, 10/30/2009 | $ | 1,578 | ||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,758, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $1,793) | ||||||||||||
1,758 | 0.08%, 10/30/2009 | 1,758 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $18, collateralized by U.S. Treasury Note 2.75%, 2013, value of $18) | ||||||||||||
18 | 0.05%, 10/30/2009 | 18 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $3,046, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $3,107) | ||||||||||||
3,046 | 0.07%, 10/30/2009 | 3,046 | ||||||||||
6,669 | ||||||||||||
Total short-term investments (cost $6,669) | $ | 6,669 | ||||||||||
Total investments (cost $797,550)5 | 100.2 | % | $ | 789,721 | ||||||||
Other assets and liabilities | (0.2 | )% | (1,202 | ) | ||||||||
Total net assets | 100.0 | % | $ | 788,519 | ||||||||
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 8.3% of total net assets at October 31, 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. | ||
5 | At October 31, 2009, the cost of securities for federal income tax purposes was $803,013 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 62,559 | ||
Unrealized Depreciation | (75,851 | ) | ||
Net Unrealized Depreciation | $ | (13,292 | ) | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
5
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 783,052 | $ | 778,247 | $ | 4,805 | $ | — | ||||||||
Short-Term Investments | 6,669 | — | 6,669 | — | ||||||||||||
Total | $ | 789,721 | $ | 778,247 | $ | 11,474 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. |
6
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $797,550) | $ | 789,721 | ||
Cash | 154 | |||
Receivables: | ||||
Fund shares sold | 2,010 | |||
Dividends and interest | 826 | |||
Other assets | 79 | |||
Total assets | 792,790 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 1,598 | |||
Fund shares redeemed | 2,344 | |||
Investment management fees | 97 | |||
Distribution fees | 41 | |||
Accrued expenses | 191 | |||
Total liabilities | 4,271 | |||
Net assets | $ | 788,519 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 908,415 | |||
Accumulated undistributed net investment income | 465 | |||
Accumulated net realized loss on investments and foreign currency transactions | (112,532 | ) | ||
Unrealized depreciation of investments | (7,829 | ) | ||
Net assets | $ | 788,519 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 10.74/$11.37 | ||
Shares outstanding | 59,488 | |||
Net assets | $ | 639,106 | ||
Class B: Net asset value per share | $ | 10.72 | ||
Shares outstanding | 3,179 | |||
Net assets | $ | 34,086 | ||
Class C: Net asset value per share | $ | 10.73 | ||
Shares outstanding | 4,446 | |||
Net assets | $ | 47,708 | ||
Class I: Net asset value per share | $ | 10.72 | ||
Shares outstanding | 555 | |||
Net assets | $ | 5,946 | ||
Class R3: Net asset value per share | $ | 10.78 | ||
Shares outstanding | 47 | |||
Net assets | $ | 506 | ||
Class R4: Net asset value per share | $ | 10.78 | ||
Shares outstanding | 135 | |||
Net assets | $ | 1,456 | ||
Class R5: Net asset value per share | $ | 10.79 | ||
Shares outstanding | 1 | |||
Net assets | $ | 8 | ||
Class Y: Net asset value per share | $ | 10.81 | ||
Shares outstanding | 5,523 | |||
Net assets | $ | 59,703 | ||
7
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 26,317 | ||
Interest | 24 | |||
Securities lending | 1 | |||
Less: Foreign tax withheld | (372 | ) | ||
Total investment income | 25,970 | |||
Expenses: | ||||
Investment management fees | 5,088 | |||
Administrative services fees | 2 | |||
Transfer agent fees | 1,329 | |||
Distribution fees | ||||
Class A | 1,396 | |||
Class B | 306 | |||
Class C | 429 | |||
Class R3 | 1 | |||
Class R4 | 1 | |||
Custodian fees | 8 | |||
Accounting services fees | 97 | |||
Registration and filing fees | 133 | |||
Board of Directors’ fees | 19 | |||
Audit fees | 27 | |||
Other expenses | 217 | |||
Total expenses (before waivers and fees paid indirectly) | 9,053 | |||
Expense waivers | (117 | ) | ||
Transfer agent fee waivers | (24 | ) | ||
Commission recapture | (45 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (186 | ) | ||
Total expenses, net | 8,867 | |||
Net Investment Income | 17,103 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (98,816 | ) | ||
Net realized loss on forward foreign currency contracts | (35 | ) | ||
Net realized gain on other foreign currency transactions | 24 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (98,827 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 133,341 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 11 | |||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 133,352 | |||
Net Gain on Investments and Foreign Currency Transactions | 34,525 | |||
Net Increase in Net Assets Resulting from Operations | $ | 51,628 | ||
8
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 17,103 | $ | 22,434 | ||||
Net realized loss on investments and foreign currency transactions | (98,827 | ) | (13,793 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 133,352 | (301,519 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 51,628 | (292,878 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (14,918 | ) | (17,009 | ) | ||||
Class B | (611 | ) | (667 | ) | ||||
Class C | (840 | ) | (972 | ) | ||||
Class I | (87 | ) | (26 | ) | ||||
Class R3 | (5 | ) | (2 | ) | ||||
Class R4 | (12 | ) | — | |||||
Class R5 | — | — | ||||||
Class Y | (1,696 | ) | (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 | (18,169 | ) | (48,568 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 47,718 | 62,259 | ||||||
Class B | 676 | (4,224 | ) | |||||
Class C | 2,522 | (7,425 | ) | |||||
Class I | 4,014 | 910 | ||||||
Class R3 | 372 | 19 | ||||||
Class R4 | 1,247 | — | ||||||
Class R5 | — | — | ||||||
Class Y | (4,583 | ) | (22,304 | ) | ||||
Net increase from capital share transactions | 51,966 | 29,235 | ||||||
Net Increase (Decrease) In Net Assets | 85,425 | (312,211 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 703,094 | 1,015,305 | ||||||
End of period | $ | 788,519 | $ | 703,094 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 465 | $ | 1,611 | ||||
9
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. |
11
October 31, 2009
(000’s Omitted)
c) | Foreign Currency Transactions – Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts – The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had no outstanding forward foreign currency contracts as of October 31, 2009. |
12
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 quarterly. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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) | Additional Derivative Instrument(s) Information | ||
The volume of derivative activity was minimal during the year ended October 31, 2009. | |||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | (35 | ) | $ | — | $ | (35 | ) | ||||||||||
Total | $ | — | $ | — | $ | — | $ | (35 | ) | $ | — | $ | (35 | ) | ||||||||||
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. |
13
October 31, 2009
(000’s Omitted)
3. | Federal Income Taxes: |
a) | Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) – Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings – 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 18,169 | $ | 26,921 | ||||
Long-Term Capital Gains * | — | 21,647 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 465 | ||
Accumulated Capital Losses * | (107,069 | ) | ||
Unrealized Depreciation † | (13,292 | ) | ||
Total Accumulated Deficit | $ | (119,896 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts – The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to |
14
decrease accumulated undistributed net investment income by $80, increase accumulated net realized gain on investments by $81, and decrease paid-in-capital by $1. | |||
e) | Capital Loss Carryforward – At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 7,634 | ||
2017 | 99,435 | |||
Total | $ | 107,069 | ||
f) | Accounting for Uncertainty in Income Taxes – Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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 | % |
15
October 31, 2009
(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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.24 | % | 1.14 | % | 1.12 | % | 1.00 | % | 0.50 | % | ||||||||||
Class B Shares | 1.91 | 2.00 | 1.96 | 1.84 | 1.38 | |||||||||||||||
Class C Shares | 1.98 | 1.87 | 1.83 | 1.70 | 1.22 | |||||||||||||||
Class I Shares | 0.96 | 0.84 | 0.81 | 0.80 | * | |||||||||||||||
Class R3 Shares | 1.59 | 1.50 | 1.50 | † | ||||||||||||||||
Class R4 Shares | 1.20 | 1.13 | 1.18 | † | ||||||||||||||||
Class R5 Shares | 0.88 | 0.84 | 0.89 | † | ||||||||||||||||
Class Y Shares | 0.81 | 0.74 | 0.73 | 0.57 | 0.10 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006. | |
† | 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $4,080 and contingent deferred sales charges of $81 from the Fund. |
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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. |
16
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $1,296 for providing such services. These fees are accrued daily and paid monthly. |
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: |
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R5 | 1 |
6. | Investment Transactions: |
For the year ended October 31, 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 | $ | 313,390 | ||
Sales Proceeds Excluding U.S. Government Obligations | 249,912 |
17
October 31, 2009
(000’s Omitted)
7. | Capital Share Transactions: |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 21,884 | 1,534 | (18,382 | ) | — | 5,036 | 11,842 | 2,683 | (10,143 | ) | — | 4,382 | ||||||||||||||||||||||||||||
Amount | $ | 206,646 | $ | 14,506 | $ | (173,434 | ) | $ | — | $ | 47,718 | $ | 151,313 | $ | 36,274 | $ | (125,328 | ) | $ | — | $ | 62,259 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,040 | 62 | (1,030 | ) | — | 72 | 428 | 142 | (931 | ) | — | (361 | ) | |||||||||||||||||||||||||||
Amount | $ | 9,665 | $ | 586 | $ | (9,575 | ) | $ | — | $ | 676 | $ | 5,527 | $ | 1,942 | $ | (11,693 | ) | $ | — | $ | (4,224 | ) | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,695 | 79 | (1,534 | ) | — | 240 | 467 | 188 | (1,252 | ) | — | (597 | ) | |||||||||||||||||||||||||||
Amount | $ | 15,982 | $ | 736 | $ | (14,196 | ) | $ | — | $ | 2,522 | $ | 5,716 | $ | 2,567 | $ | (15,708 | ) | $ | — | $ | (7,425 | ) | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 957 | 6 | (548 | ) | — | 415 | 93 | 3 | (16 | ) | — | 80 | ||||||||||||||||||||||||||||
Amount | $ | 9,678 | $ | 60 | $ | (5,724 | ) | $ | — | $ | 4,014 | $ | 1,039 | $ | 48 | $ | (177 | ) | $ | — | $ | 910 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 41 | — | (2 | ) | — | 39 | 2 | — | — | — | 2 | |||||||||||||||||||||||||||||
Amount | $ | 392 | $ | 5 | $ | (25 | ) | $ | — | $ | 372 | $ | 23 | $ | 4 | $ | (8 | ) | $ | — | $ | 19 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 145 | 1 | (12 | ) | — | 134 | — | — | — | — | — | |||||||||||||||||||||||||||||
Amount | $ | 1,358 | $ | 12 | $ | (123 | ) | $ | — | $ | 1,247 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,160 | 178 | (1,799 | ) | — | (461 | ) | 794 | 498 | (3,863 | ) | — | (2,571 | ) | ||||||||||||||||||||||||||
Amount | $ | 10,646 | $ | 1,696 | $ | (16,925 | ) | $ | — | $ | (4,583 | ) | $ | 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) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 40 | $ | 372 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
19
- Selected Per-Share Data (a)- | ||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 10.35 | $ | 0.24 | $ | — | $ | 0.41 | $ | 0.65 | $ | (0.26 | ) | $ | — | $ | — | $ | (0.26 | ) | $ | 0.39 | $ | 10.74 | ||||||||||||||||||||
B | 10.33 | 0.18 | — | 0.40 | 0.58 | (0.19 | ) | — | — | (0.19 | ) | 0.39 | 10.72 | |||||||||||||||||||||||||||||||
C | 10.34 | 0.17 | — | 0.41 | 0.58 | (0.19 | ) | — | — | (0.19 | ) | 0.39 | 10.73 | |||||||||||||||||||||||||||||||
I | 10.33 | 0.22 | — | 0.46 | 0.68 | (0.29 | ) | — | — | (0.29 | ) | 0.39 | 10.72 | |||||||||||||||||||||||||||||||
R3 | 10.39 | 0.15 | — | 0.47 | 0.62 | (0.23 | ) | — | — | (0.23 | ) | 0.39 | 10.78 | |||||||||||||||||||||||||||||||
R4 | 10.40 | 0.18 | — | 0.47 | 0.65 | (0.27 | ) | — | — | (0.27 | ) | 0.38 | 10.78 | |||||||||||||||||||||||||||||||
R5 | 10.40 | 0.28 | — | 0.40 | 0.68 | (0.29 | ) | — | — | (0.29 | ) | 0.39 | 10.79 | |||||||||||||||||||||||||||||||
Y | 10.40 | 0.29 | — | 0.42 | 0.71 | (0.30 | ) | — | — | (0.30 | ) | 0.41 | 10.81 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 15.12 | 0.21 | — | (4.41 | ) | (4.20 | ) | (0.19 | ) | (0.40 | ) | — | (0.59 | ) | (4.79 | ) | 10.33 | |||||||||||||||||||||||||||
C | 15.14 | 0.23 | — | (4.42 | ) | (4.19 | ) | (0.21 | ) | (0.40 | ) | — | (0.61 | ) | (4.80 | ) | 10.34 | |||||||||||||||||||||||||||
I | 15.12 | 0.35 | — | (4.39 | ) | (4.04 | ) | (0.35 | ) | (0.40 | ) | — | (0.75 | ) | (4.79 | ) | 10.33 | |||||||||||||||||||||||||||
R3 | 15.21 | 0.27 | — | (4.41 | ) | (4.14 | ) | (0.28 | ) | (0.40 | ) | — | (0.68 | ) | (4.82 | ) | 10.39 | |||||||||||||||||||||||||||
R4 | 15.22 | 0.32 | — | (4.43 | ) | (4.11 | ) | (0.31 | ) | (0.40 | ) | — | (0.71 | ) | (4.82 | ) | 10.40 | |||||||||||||||||||||||||||
R5 | 15.22 | 0.36 | — | (4.43 | ) | (4.07 | ) | (0.35 | ) | (0.40 | ) | — | (0.75 | ) | (4.82 | ) | 10.40 | |||||||||||||||||||||||||||
Y | 15.23 | 0.39 | — | (4.46 | ) | (4.07 | ) | (0.36 | ) | (0.40 | ) | — | (0.76 | ) | (4.83 | ) | 10.40 | |||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 13.97 | 0.16 | — | 1.67 | 1.83 | (0.14 | ) | (0.54 | ) | — | (0.68 | ) | 1.15 | 15.12 | ||||||||||||||||||||||||||||||
C | 13.99 | 0.18 | — | 1.67 | 1.85 | (0.16 | ) | (0.54 | ) | — | (0.70 | ) | 1.15 | 15.14 | ||||||||||||||||||||||||||||||
I | 13.99 | 0.31 | — | 1.69 | 2.00 | (0.33 | ) | (0.54 | ) | — | (0.87 | ) | 1.13 | 15.12 | ||||||||||||||||||||||||||||||
R3(f) | 13.97 | 0.17 | — | 1.24 | 1.41 | (0.17 | ) | — | — | (0.17 | ) | 1.24 | 15.21 | |||||||||||||||||||||||||||||||
R4(f) | 13.97 | 0.23 | — | 1.22 | 1.45 | (0.20 | ) | — | — | (0.20 | ) | 1.25 | 15.22 | |||||||||||||||||||||||||||||||
R5(f) | 13.97 | 0.27 | — | 1.21 | 1.48 | (0.23 | ) | — | — | (0.23 | ) | 1.25 | 15.22 | |||||||||||||||||||||||||||||||
Y | 14.07 | 0.31 | — | 1.72 | 2.03 | (0.33 | ) | (0.54 | ) | — | (0.87 | ) | 1.16 | 15.23 | ||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 12.07 | 0.16 | — | 1.94 | 2.10 | (0.17 | ) | (0.03 | ) | — | (0.20 | ) | 1.90 | 13.97 | ||||||||||||||||||||||||||||||
C | 12.08 | 0.17 | — | 1.96 | 2.13 | (0.19 | ) | (0.03 | ) | — | (0.22 | ) | 1.91 | 13.99 | ||||||||||||||||||||||||||||||
I(i) | 13.52 | 0.08 | — | 0.46 | 0.54 | (0.07 | ) | — | — | (0.07 | ) | 0.47 | 13.99 | |||||||||||||||||||||||||||||||
Y | 12.15 | 0.30 | — | 1.98 | 2.28 | (0.33 | ) | (0.03 | ) | — | (0.36 | ) | 1.92 | 14.07 | ||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 11.26 | 0.17 | — | 0.82 | 0.99 | (0.16 | ) | (0.02 | ) | — | (0.18 | ) | 0.81 | 12.07 | ||||||||||||||||||||||||||||||
C | 11.27 | 0.20 | — | 0.81 | 1.01 | (0.18 | ) | (0.02 | ) | — | (0.20 | ) | 0.81 | 12.08 | ||||||||||||||||||||||||||||||
Y | 11.33 | 0.32 | — | 0.83 | 1.15 | (0.31 | ) | (0.02 | ) | — | (0.33 | ) | 0.82 | 12.15 |
(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) | Commenced operations on December 22, 2006. | |
(g) | Not annualized. | |
(h) | Annualized. | |
(i) | Commenced operations on August 31, 2006. |
20
- Ratios and Supplemental Data - | ||||||||||||||||||||||||
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||
6.62% | $ | 639,106 | 1.26 | % | 1.25 | % | 1.25 | % | 2.51 | % | 37 | % | ||||||||||||
5.91 | 34,086 | 2.19 | 1.92 | 1.92 | 1.86 | — | ||||||||||||||||||
5.85 | 47,708 | 1.98 | 1.98 | 1.98 | 1.79 | — | ||||||||||||||||||
6.98 | 5,946 | 0.96 | 0.96 | 0.96 | 2.28 | — | ||||||||||||||||||
6.31 | 506 | 1.63 | �� | 1.60 | 1.60 | 1.62 | — | |||||||||||||||||
6.58 | 1,456 | 1.21 | 1.21 | 1.21 | 1.84 | — | ||||||||||||||||||
6.96 | 8 | 0.89 | 0.89 | 0.89 | 2.88 | — | ||||||||||||||||||
7.22 | 59,703 | 0.81 | 0.81 | 0.81 | 3.00 | — | ||||||||||||||||||
(28.08) | 563,703 | 1.19 | 1.14 | 1.14 | 2.49 | 53 | ||||||||||||||||||
(28.67) | 32,097 | 2.06 | 2.00 | 2.00 | 1.63 | — | ||||||||||||||||||
(28.61) | 43,493 | 1.92 | 1.87 | 1.87 | 1.76 | — | ||||||||||||||||||
(27.80) | 1,449 | 0.90 | 0.85 | 0.85 | 2.80 | — | ||||||||||||||||||
(28.26) | 78 | 1.55 | 1.50 | 1.50 | 2.14 | — | ||||||||||||||||||
(28.03) | 8 | 1.18 | 1.13 | 1.13 | 2.50 | — | ||||||||||||||||||
(27.82) | 8 | 0.90 | 0.85 | 0.85 | 2.78 | — | ||||||||||||||||||
(27.80) | 62,258 | 0.80 | 0.75 | 0.75 | 2.90 | — | ||||||||||||||||||
14.68 | 758,905 | 1.22 | 1.12 | 1.12 | 1.93 | 20 | ||||||||||||||||||
13.69 | 52,424 | 2.07 | 1.97 | 1.97 | 1.09 | — | ||||||||||||||||||
13.80 | 72,690 | 1.94 | 1.84 | 1.84 | 1.23 | — | ||||||||||||||||||
14.96 | 907 | 0.92 | 0.82 | 0.82 | 2.18 | — | ||||||||||||||||||
10.11 (g) | 95 | 1.60 | (h) | 1.50 | (h) | 1.50 | (h) | 1.51 | (h) | — | ||||||||||||||
10.44 (g) | 11 | 1.28 | (h) | 1.18 | (h) | 1.18 | (h) | 1.84 | (h) | — | ||||||||||||||
10.67 (g) | 11 | 0.99 | (h) | 0.89 | (h) | 0.89 | (h) | 2.13 | (h) | — | ||||||||||||||
15.12 | 130,262 | 0.83 | 0.73 | 0.73 | 2.30 | — | ||||||||||||||||||
18.70 | 529,664 | 1.30 | 1.00 | 1.00 | 2.02 | 24 | ||||||||||||||||||
17.67 | 43,198 | 2.14 | 1.84 | 1.84 | 1.19 | — | ||||||||||||||||||
17.88 | 61,572 | 2.01 | 1.71 | 1.71 | 1.33 | — | ||||||||||||||||||
4.05 (g) | 106 | 1.37 | (h) | 0.80 | (h) | 0.80 | (h) | 1.32 | (h) | — | ||||||||||||||
19.18 | 7,593 | 0.88 | 0.58 | 0.58 | 2.26 | — | ||||||||||||||||||
9.74 | 379,604 | 1.34 | 0.51 | 0.51 | 2.41 | 23 | ||||||||||||||||||
8.84 | 33,989 | 2.18 | 1.38 | 1.38 | 1.53 | — | ||||||||||||||||||
9.00 | 53,435 | 2.03 | 1.23 | 1.23 | 1.70 | — | ||||||||||||||||||
10.22 | 784 | 0.91 | 0.11 | 0.11 | 2.79 | — |
21
The Hartford Mutual Funds, Inc.
December 15, 2009
22
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
23
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 — 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009. |
24
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
25
DRD* | 100.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.257 | N/A | N/A | 0.257 | ||||||||||||
Class B | 0.191 | N/A | N/A | 0.191 | ||||||||||||
Class C | 0.187 | N/A | N/A | 0.187 | ||||||||||||
Class I | 0.288 | N/A | N/A | 0.288 | ||||||||||||
Class R3 | 0.231 | N/A | N/A | 0.231 | ||||||||||||
Class R4 | 0.265 | N/A | N/A | 0.265 | ||||||||||||
Class R5 | 0.291 | N/A | N/A | 0.291 | ||||||||||||
Class Y | 0.297 | N/A | N/A | 0.297 |
26
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,208.90 | $ | 6.96 | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1.25 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,204.30 | $ | 10.78 | $ | 1,000.00 | $ | 1,015.43 | $ | 9.86 | 1.94 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,204.70 | $ | 10.95 | $ | 1,000.00 | $ | 1,015.27 | $ | 10.01 | 1.97 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,211.30 | $ | 5.35 | $ | 1,000.00 | $ | 1,020.37 | $ | 4.89 | 0.96 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,206.70 | $ | 8.90 | $ | 1,000.00 | $ | 1,017.14 | $ | 8.13 | 1.60 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,209.90 | $ | 6.74 | $ | 1,000.00 | $ | 1,019.11 | $ | 6.16 | 1.21 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,211.20 | $ | 4.85 | $ | 1,000.00 | $ | 1,020.82 | $ | 4.43 | 0.87 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,212.40 | $ | 4.41 | $ | 1,000.00 | $ | 1,021.22 | $ | 4.02 | 0.79 | 184 | 365 |
27
28
29
30
Manager Discussions (Unaudited) | 2 | |||
Financial Satements | ||||
4 | ||||
13 | ||||
14 | ||||
15 | ||||
16 | ||||
17 | ||||
28 | ||||
30 | ||||
31 | ||||
33 | ||||
33 | ||||
34 | ||||
35 | ||||
36 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks a high level of current income. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
Floating Rate A# | 23.65 | % | 1.86 | % | ||||
Floating Rate A## | 19.94 | % | 1.17 | % | ||||
Floating Rate B# | 22.74 | % | 1.09 | % | ||||
Floating Rate B## | 17.74 | % | 0.74 | % | ||||
Floating Rate C# | 22.60 | % | 1.09 | % | ||||
Floating Rate C## | 21.60 | % | 1.09 | % | ||||
Floating Rate I# | 24.08 | % | 2.09 | % | ||||
Floating Rate R3# | 23.31 | % | 1.82 | % | ||||
Floating Rate R4# | 23.65 | % | 1.96 | % | ||||
Floating Rate R5# | 23.47 | % | 2.06 | % | ||||
Floating Rate Y# | 23.87 | % | 2.14 | % | ||||
Credit Suisse Leveraged Loan Index | 24.65 | % | 2.92 | % |
# | 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, 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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||
Michael Bacevich | Frank Ossino | |
Managing Director | Senior Vice President |
2
as of October 31, 2009
Percentage of | ||||
Long-Term | ||||
Rating | Holdings | |||
BBB | 5.8 | % | ||
BB | 21.7 | |||
B | 55.5 | |||
CCC | 12.6 | |||
CC | 0.1 | |||
C | 0.2 | |||
D | 2.4 | |||
Not Rated | 1.7 | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
Industry | Net Assets | |||
Fixed Income Securities | ||||
Accommodation and Food Services | 1.5 | % | ||
Administrative Waste Management and Remediation | 2.8 | |||
Agriculture, Construction, Mining and Machinery | 1.4 | |||
Agriculture, Forestry, Fishing and Hunting | 0.1 | |||
Air Transportation | 3.1 | |||
Apparel Manufacturing | 0.3 | |||
Arts, Entertainment and Recreation | 6.7 | |||
Beverage and Tobacco Product Manufacturing | 0.9 | |||
Chemical Manufacturing | 7.6 | |||
Computer and Electronic Product Manufacturing | 1.5 | |||
Construction | 0.3 | |||
Finance and Insurance | 5.6 | |||
Food Manufacturing | 4.4 | |||
Health Care and Social Assistance | 10.4 | |||
Information | 19.4 | |||
Mining | 1.2 | |||
Miscellaneous Manufacturing | 1.7 | |||
Motor Vehicle & Parts Manufacturing | 4.0 | |||
Other Services | 0.5 | |||
Paper Manufacturing | 2.0 | |||
Petroleum and Coal Products Manufacturing | 4.8 | |||
Primary Metal Manufacturing | 0.2 | |||
Professional, Scientific and Technical Services | 1.6 | |||
Real Estate and Rental and Leasing | 1.7 | |||
Retail Trade | 5.4 | |||
Services | 0.5 | |||
Soap, Cleaning Compound and Toilet Manufacturing | 1.1 | |||
Textile Mills | 0.3 | |||
Textile Product Mills | 0.5 | |||
Toy Manufacturing | 0.1 | |||
Truck Transportation | 0.4 | |||
Utilities | 4.6 | |||
Other Securities | ||||
Media | 0.0 | |||
Utilities | 0.0 | |||
Short-Term Investments | 9.7 | |||
Other Assets and Liabilities | (6.3 | ) | ||
Total | 100.0 | % | ||
3
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 0.4% | ||||||||
Finance and Insurance - 0.4% | ||||||||
Bayview Financial Acquisition Trust | ||||||||
$ | 2,600 | 2.39%, 05/28/2037 ⌂Δ | $ | 28 | ||||
Goldman Sachs Mortgage Securities Corp. | ||||||||
16,838 | 1.74%, 02/01/2012 ⌂Δ | 8,419 | ||||||
Helios Finance L.P. | ||||||||
5,000 | 2.59%, 10/20/2014 ■Δ | 3,572 | ||||||
Structured Asset Securities Corp. | ||||||||
4,453 | 2.74%, 02/25/2037 Δ | 13 | ||||||
Wells Fargo Home Equity Trust | ||||||||
2,302 | 2.49%, 03/25/2037 ⌂Δ | 4 | ||||||
12,036 | ||||||||
Total asset & commercial mortgage backed securities (cost $31,015) | $ | 12,036 | ||||||
CORPORATE BONDS: INVESTMENT GRADE - 2.9% | ||||||||
Administrative Waste Management and Remediation - 0.3% | ||||||||
Allied Waste North America, Inc. | ||||||||
$ | 10,000 | 7.88%, 04/15/2013 ‡ | $ | 10,312 | ||||
Air Transportation - 0.1% | ||||||||
Delta Air Lines, Inc. | ||||||||
3,000 | 7.57%, 11/18/2010 | 3,000 | ||||||
Beverage and Tobacco Product Manufacturing - 0.6% | ||||||||
Anheuser-Busch InBev N.V. | ||||||||
5,000 | 7.20%, 01/15/2014 ■ | 5,633 | ||||||
10,000 | 7.75%, 01/15/2019 ■ | 11,653 | ||||||
17,286 | ||||||||
Chemical Manufacturing - 0.5% | ||||||||
Dow Chemical Co. | ||||||||
14,000 | 7.60%, 05/15/2014 ‡ | 15,555 | ||||||
Information - 0.5% | ||||||||
Time Warner Cable, Inc. | ||||||||
15,000 | 7.50%, 04/01/2014 ‡ | 17,266 | ||||||
Mining - 0.8% | ||||||||
Anglo American Capital plc | ||||||||
9,970 | 9.38%, 04/08/2014 ■‡ | 11,644 | ||||||
Rio Tinto Finance USA Ltd. | ||||||||
11,660 | 8.95%, 05/01/2014 ‡ | 13,781 | ||||||
25,425 | ||||||||
Petroleum and Coal Products Manufacturing - 0.1% | ||||||||
Valero Energy Corp. | ||||||||
3,688 | 9.38%, 03/15/2019 ‡ | 4,365 | ||||||
Total corporate bonds: investment grade (cost $82,676) | $ | 93,209 | ||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 10.4% | ||||||||
Accommodation and Food Services - 0.8% | ||||||||
Ameristar Casinos, Inc. | ||||||||
$ | 4,485 | 9.25%, 06/01/2014 ■ | $ | 4,664 | ||||
MGM Mirage, Inc. | ||||||||
14,815 | 8.50%, 09/15/2010 ‡ | 14,704 | ||||||
Wynn Las Vegas LLC | ||||||||
5,000 | 6.63%, 12/01/2014 ‡ | 4,750 | ||||||
24,118 | ||||||||
Agriculture, Forestry, Fishing and Hunting - 0.1% | ||||||||
Dole Food Co., Inc. | ||||||||
1,975 | 8.00%, 10/01/2016 ■ | 2,000 | ||||||
Air Transportation - 0.4% | ||||||||
Delta Air Lines, Inc. | ||||||||
8,000 | 9.50%, 09/15/2014 ■ | 8,160 | ||||||
United Air Lines, Inc. | ||||||||
4,000 | 10.40%, 11/01/2016 ‡ | 4,080 | ||||||
12,240 | ||||||||
Arts, Entertainment and Recreation - 0.4% | ||||||||
FireKeepers Development Authority | ||||||||
4,510 | 13.88%, 05/01/2015 ■ | 4,871 | ||||||
Marquee Holdings, Inc. | ||||||||
9,215 | 9.51%, 08/15/2014 ‡ | 7,660 | ||||||
12,531 | ||||||||
Beverage and Tobacco Product Manufacturing - 0.1% | ||||||||
Constellation Brands, Inc. | ||||||||
2,850 | 8.38%, 12/15/2014 ‡ | 3,007 | ||||||
Finance and Insurance - 0.7% | ||||||||
Ford Motor Credit Co. | ||||||||
10,000 | 8.00%, 06/01/2014 ‡ | 9,723 | ||||||
5,000 | 12.00%, 05/15/2015 ‡ | 5,630 | ||||||
LPL Holdings, Inc. | ||||||||
7,185 | 10.75%, 12/15/2015 ■ | 7,275 | ||||||
22,628 | ||||||||
Food Manufacturing - 0.4% | ||||||||
Dean Foods Co. | ||||||||
4,000 | 7.00%, 06/01/2016 ‡ | 3,880 | ||||||
Smithfield Foods, Inc. | ||||||||
10,000 | 10.00%, 07/15/2014 ■ | 10,500 | ||||||
14,380 | ||||||||
Health Care and Social Assistance - 1.3% | ||||||||
DaVita, Inc. | ||||||||
15,650 | 6.63%, 03/15/2013 ‡ | 15,415 | ||||||
DJO Finance LLC | ||||||||
2,150 | 10.88%, 11/15/2014 ‡ | 2,241 | ||||||
HCA, Inc. | ||||||||
7,000 | 6.30%, 10/01/2012 ‡ | 6,860 | ||||||
6,000 | 6.75%, 07/15/2013 ‡ | 5,835 | ||||||
2,000 | 7.88%, 02/01/2011 ‡ | 2,040 | ||||||
Invacare Corp. | ||||||||
5,820 | 9.75%, 02/15/2015 ‡ | 6,155 | ||||||
Warner Chilcott Corp. | ||||||||
4,510 | 8.75%, 02/01/2015 ‡ | 4,668 | ||||||
43,214 | ||||||||
Information - 3.4% | ||||||||
Charter Communications Operating LLC | ||||||||
3,000 | 10.00%, 04/30/2012 ■Ψ | 3,045 | ||||||
Cricket Communications, Inc. | ||||||||
7,745 | 7.75%, 05/15/2016 ■ | 7,726 | ||||||
5,600 | 9.38%, 11/01/2014 ‡ | 5,432 | ||||||
CSC Holdings, Inc. | ||||||||
17,265 | 8.50%, 04/15/2014 ■‡ | 18,236 |
4
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 10.4% - (continued) | ||||||||
Information - 3.4% - (continued) | ||||||||
Frontier Communications Corp. | ||||||||
$ | 5,000 | 6.25%, 01/15/2013 ‡ | $ | 4,938 | ||||
4,000 | 8.25%, 05/01/2014 ‡ | 4,100 | ||||||
Intelsat Subsidiary Holding Co. | ||||||||
1,000 | 8.50%, 01/15/2013 ‡ | 1,004 | ||||||
5,000 | 8.88%, 01/15/2015 ■ | 5,018 | ||||||
Level 3 Financing, Inc. | ||||||||
2,000 | 4.60%, 02/15/2015 ‡Δ | 1,455 | ||||||
Mediacom Broadband LLC | ||||||||
5,000 | 8.50%, 10/15/2015 ‡ | 5,050 | ||||||
Mediacom LLC | ||||||||
1,025 | 9.13%, 08/15/2019 ■ | 1,058 | ||||||
MetroPCS Wireless, Inc. | ||||||||
7,300 | 9.25%, 11/01/2014 ‡ | 7,355 | ||||||
Qwest Corp. | ||||||||
9,945 | 8.88%, 03/15/2012 ‡ | 10,467 | ||||||
Sprint Capital Corp. | ||||||||
5,000 | 8.38%, 03/15/2012 ‡ | 5,062 | ||||||
Videotron Ltee | ||||||||
10,909 | 6.88%, 01/15/2014 ‡ | 10,909 | ||||||
Wind Acquisition Finance S.A. | ||||||||
5,500 | 11.75%, 07/15/2017 ■ | 6,215 | ||||||
Windstream Corp. | ||||||||
10,500 | 8.13%, 08/01/2013 ‡ | 10,894 | ||||||
XM Satellite Radio, Inc. | ||||||||
2,000 | 11.25%, 06/15/2013 ■ | 2,100 | ||||||
110,064 | ||||||||
Mining - 0.4% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | ||||||||
12,000 | 8.25%, 04/01/2015 ‡ | 12,870 | ||||||
Motor Vehicle & Parts Manufacturing - 0.2% | ||||||||
UCI Holdco, Inc. | ||||||||
10,231 | 9.25%, 12/15/2013 ‡Δ | 5,320 | ||||||
Paper Manufacturing - 0.4% | ||||||||
Georgia-Pacific LLC | ||||||||
5,000 | 8.13%, 05/15/2011 ‡ | 5,200 | ||||||
6,980 | 9.50%, 12/01/2011 ‡ | 7,538 | ||||||
12,738 | ||||||||
Petroleum and Coal Products Manufacturing - 0.4% | ||||||||
Inergy L.P. | ||||||||
1,179 | 8.25%, 03/01/2016 ‡ | 1,197 | ||||||
4,835 | 8.75%, 03/01/2015 ‡ | 4,941 | ||||||
Western Refining, Inc. | ||||||||
9,000 | 10.75%, 06/15/2014 ■Δ | 8,325 | ||||||
14,463 | ||||||||
Professional, Scientific and Technical Services - 0.4% | ||||||||
Affinion Group, Inc. | ||||||||
6,555 | 10.13%, 10/15/2013 ‡ | 6,719 | ||||||
5,305 | 11.50%, 10/15/2015 ‡ | 5,544 | ||||||
12,263 | ||||||||
Retail Trade - 1.0% | ||||||||
Amerigas Partners L.P. | ||||||||
10,375 | 7.13%, 05/20/2016 | 10,116 | ||||||
Dollarama Group L.P. | ||||||||
7,190 | 8.88%, 08/15/2012 ‡ | 7,509 | ||||||
Supervalu, Inc. | ||||||||
8,000 | 8.00%, 05/01/2016 ‡ | 8,140 | ||||||
Yankee Acquisition Corp. | ||||||||
8,000 | 8.50%, 02/15/2015 ‡ | 7,640 | ||||||
33,405 | ||||||||
Total corporate bonds: non-investment grade (cost $317,323) | $ | 335,241 | ||||||
SENIOR FLOATING RATE INTERESTS: INVESTMENT GRADE♦ - 2.7% | ||||||||
Food Manufacturing - 1.3% | ||||||||
WM Wrigley Jr. Co. | ||||||||
$ | 40,535 | 6.50%, 10/06/2014 ± | $ | 40,996 | ||||
Health Care and Social Assistance - 1.1% | ||||||||
Fresenius SE, Term Loan B | ||||||||
11,631 | 6.75%, 09/10/2014 ± | 11,695 | ||||||
Fresenius SE, Term Loan B2 | ||||||||
6,730 | 6.75%, 09/10/2014 ± | 6,768 | ||||||
Life Technologies Corp. | ||||||||
16,700 | 5.25%, 11/23/2015 ± | 16,756 | ||||||
35,219 | ||||||||
Motor Vehicle & Parts Manufacturing - 0.1% | ||||||||
Lear Corp., DIP Term Loan | ||||||||
4,216 | 0.00%, 08/10/2010 ±Ω | 4,216 | ||||||
Professional, Scientific and Technical Services - 0.2% | ||||||||
Foster Wheeler LLC | ||||||||
5,500 | 0.18%, 09/12/2011 ± | 5,225 | ||||||
Total senior floating rate interests: investment grade (cost $84,197) | $ | 85,656 | ||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE♦ - 80.2% | ||||||||
Accommodation and Food Services - 0.7% | ||||||||
Las Vegas Sands Corp. | ||||||||
$ | 1,985 | 2.04%, 05/23/2013 ± | $ | 1,587 | ||||
Las Vegas Sands Corp., Delayed Draw Term Loan 1 | ||||||||
3,672 | 2.04%, 05/23/2014 ± | 2,936 | ||||||
Las Vegas Sands Corp., Term Loan B | ||||||||
14,357 | 2.04%, 05/23/2014 ± | 11,479 | ||||||
Wynn Resorts Ltd. | ||||||||
7,500 | 1.99%, 06/27/2014 ± | 6,988 | ||||||
22,990 | ||||||||
Administrative Waste Management and Remediation - 2.5% | ||||||||
Acosta, Inc. | ||||||||
20,005 | 2.50%, 07/29/2013 ± | 18,942 | ||||||
Affinion Group, Inc., Tranche B Term Loan | ||||||||
21,732 | 2.74%, 10/17/2012 ± | 20,782 | ||||||
Affinion Group, Inc., Unsecured Term Loan | ||||||||
17,031 | 9.19%, 05/17/2012 ±☼ | 15,328 | ||||||
Brickman Group Holdings, Inc. | ||||||||
12,754 | 2.28%, 01/23/2014 ± | 11,964 | ||||||
Energy Solutions, LLC, Add-On Letter of Credit | ||||||||
1,514 | 0.25%, 06/07/2013 ± | 1,499 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE♦ - 80.2% - (continued) | ||||||||
Administrative Waste Management and Remediation - 2.5% - (continued) | ||||||||
Fleetcor Technologies Operating Co. LLC, | ||||||||
Tranche 1 Term Loan | ||||||||
$ | 7,813 | 2.50%, 04/30/2013 ± | $ | 7,344 | ||||
Fleetcor Technologies Operating Co. LLC, | ||||||||
Tranche 2 Term Loan | ||||||||
2,510 | 2.50%, 04/30/2013 ± | 2,359 | ||||||
Synagro Technologies, Inc. | ||||||||
3,910 | 2.24%, 03/28/2014 ± | 3,135 | ||||||
United Site Services, Inc. | ||||||||
1,800 | 0.00%, 06/29/2013 ±⌂• | 315 | ||||||
81,668 | ||||||||
Agriculture, Construction, Mining and Machinery - 1.4% | ||||||||
Ashtead Group plc | ||||||||
5,996 | 2.06%, 08/21/2011 ± | 5,748 | ||||||
Edwards Ltd. | ||||||||
3,768 | 2.24%, 05/31/2014 ± | 2,803 | ||||||
Goodyear Engineered Products, Delayed | ||||||||
Delivery Term Loan | ||||||||
3,408 | 2.50%, 07/31/2014 ±☼ | 2,733 | ||||||
Goodyear Engineered Products, First Lien | ||||||||
24,216 | 2.50%, 07/31/2014 ±☼ | 19,418 | ||||||
Goodyear Engineered Products, Second Lien | ||||||||
4,000 | 6.00%, 07/31/2015 ± | 2,360 | ||||||
Lincoln Industries Corp. | ||||||||
3,500 | 5.25%, 01/10/2015 ±⌂ | 2,590 | ||||||
Lincoln Industries Corp., First Lien Delayed Draw | ||||||||
889 | 2.79%, 07/11/2014 ± | 800 | ||||||
Lincoln Industries Corp., First Lien Term Loan | ||||||||
2,305 | 2.52%, 07/11/2014 ± | 2,075 | ||||||
Nacco Material Handling Group | ||||||||
9,656 | 2.74%, 03/22/2013 ± | 7,507 | ||||||
46,034 | ||||||||
Air Transportation - 2.6% | ||||||||
Delta Air Lines, Inc. | ||||||||
15,880 | 2.27%, 04/25/2012 ± | 14,312 | ||||||
3,980 | 3.53%, 04/30/2014 ± | 3,300 | ||||||
1,840 | 8.75%, 09/30/2013 ± | 1,838 | ||||||
MacQuarie Aircraft Leasing Finance S.A. | ||||||||
17,697 | 1.74%, 11/29/2013 ±⌂☼ | 16,193 | ||||||
9,792 | 4.24%, 11/29/2013 ±⌂ | 5,386 | ||||||
United Air Lines, Inc. | ||||||||
45,273 | 2.31%, 02/01/2014 ±☼ | 35,369 | ||||||
US Airways Group, Inc. | ||||||||
9,855 | 2.75%, 03/23/2014 ± | 6,593 | ||||||
82,991 | ||||||||
Apparel Manufacturing - 0.3% | ||||||||
Hanesbrands, Inc. | ||||||||
8,500 | 3.99%, 03/05/2014 ± | 8,197 | ||||||
Arts, Entertainment and Recreation - 6.3% | ||||||||
24 Hour Fitness Worldwide, Inc. | ||||||||
10,782 | 2.77%, 06/08/2012 ± | 9,991 | ||||||
Canwest MediaWorks L.P. | ||||||||
4,903 | 0.00%, 07/10/2014 ±• | 3,922 | ||||||
Caribe Information Investment, Inc. | ||||||||
11,725 | 2.51%, 03/29/2013 ±⌂ | 7,915 | ||||||
Carmike Cinemas, Inc. | ||||||||
5,003 | 3.85%, 05/19/2012 ± | 4,815 | ||||||
1,562 | 4.24%, 05/19/2012 ± | 1,503 | ||||||
Cedar Fair L.P. | ||||||||
5,529 | 4.24%, 12/31/2014 ± | 5,346 | ||||||
5,286 | 4.27%, 12/31/2014 ± | 5,110 | ||||||
Cedar Fair L.P., Canadian Term Loan | ||||||||
1,060 | 2.26%, 02/17/2014 ± | 1,007 | ||||||
Cedar Fair L.P., US Term Loan | ||||||||
6,398 | 2.24%, 08/30/2012 ±☼ | 6,122 | ||||||
Cengage | ||||||||
5,801 | 2.75%, 07/05/2014 ± | 5,018 | ||||||
Cenveo, Inc., Delayed Draw Term Loan | ||||||||
362 | 4.79%, 06/21/2013 ± | 351 | ||||||
Cenveo, Inc., Term Loan C | ||||||||
17,906 | 4.79%, 06/21/2013 ± | 17,354 | ||||||
Dex Media West LLC, Inc. | ||||||||
22,065 | 7.00%, 10/24/2014 ±☼Ψ | 19,406 | ||||||
F & W Publications, Inc., New Term Loan B | ||||||||
1,463 | 0.00%, 08/05/2012 ±⌂• | 636 | ||||||
F & W Publications, Inc., Second Lien Term Loan | ||||||||
4,500 | 0.00%, 08/05/2012 ±⌂• | 225 | ||||||
F & W Publications, Inc., Tranche B Term Loan | ||||||||
6,950 | 0.00%, 08/05/2012 ±⌂• | 3,023 | ||||||
Gatehouse Media Operating, Inc., Delayed Draw Term Loan | ||||||||
4,251 | 2.25%, 08/05/2014 ± | 1,618 | ||||||
Gatehouse Media Operating, Inc., Initial Term Loan | ||||||||
14,391 | 2.25%, 08/05/2014 ± | 5,478 | ||||||
Golden Nugget, Inc. | ||||||||
2,539 | 2.25%, 06/22/2014 ± | 1,719 | ||||||
1,445 | 2.26%, 06/22/2014 ± | 978 | ||||||
3,750 | 3.50%, 12/31/2014 ±⌂ | 1,500 | ||||||
Greenwood Racing, Inc. | ||||||||
10,684 | 2.50%, 11/14/2011 ± | 10,417 | ||||||
Marquee Holdings, Inc. | ||||||||
7,637 | 5.30%, 06/13/2012 ± | 6,836 | ||||||
Penton Media, Inc. | ||||||||
8,868 | 2.54%, 02/06/2013 ± | 6,172 | ||||||
4,000 | 5.28%, 02/06/2014 ±⌂ | 787 | ||||||
Pittsburgh Casino | ||||||||
4,000 | 9.25%, 01/24/2013 ± | 3,675 | ||||||
R.H. Donnelley, Inc., Term Loan D-1 | ||||||||
6,978 | 6.75%, 10/24/2014 ±Ψ | 6,043 | ||||||
R.H. Donnelley, Inc., Tranche D-2 Term Loan | ||||||||
3,854 | 6.75%, 10/24/2014 ±Ψ | 3,339 | ||||||
Regal Cinemas, Inc. | ||||||||
16,110 | 4.03%, 10/27/2013 ± | 15,913 | ||||||
Town Sports International Holdings, Inc. | ||||||||
5,855 | 2.06%, 02/27/2014 ± | 5,387 | ||||||
Universal City Development Partners Ltd. | ||||||||
4,313 | 6.00%, 11/15/2014 ±☼ | 4,312 |
6
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE♦ - 80.2% - (continued) | ||||||||
Arts, Entertainment and Recreation - 6.3% - (continued) | ||||||||
Venetian Macau Ltd. | ||||||||
$ | 38,535 | 5.79%, 05/25/2012 - 05/25/2013 ±☼ | $ | 35,531 | ||||
201,449 | ||||||||
Beverage and Tobacco Product Manufacturing - 0.2% | ||||||||
Van Houtte, Inc. | ||||||||
2,000 | 5.50%, 12/09/2014 ± | 1,648 | ||||||
Van Houtte, Inc., First Lien Term Loan | ||||||||
3,434 | 2.78%, 07/09/2014 ± | 3,279 | ||||||
Van Houtte, Inc., Second Lien Term Loan | ||||||||
468 | 2.78%, 07/09/2014 ± | 447 | ||||||
5,374 | ||||||||
Chemical Manufacturing - 7.1% | ||||||||
Arizona Chemical Co. | ||||||||
6,455 | 2.49%, 02/27/2013 ± | 6,084 | ||||||
9,250 | 5.76%, 02/27/2014 ± | 7,932 | ||||||
Ashland, Inc. | ||||||||
1,153 | 5.75%, 11/13/2013 ± | 1,157 | ||||||
3,682 | 6.65%, 05/13/2014 ± | 3,744 | ||||||
Brenntag Group | ||||||||
10,000 | 4.25%, 12/23/2014 ± | 9,500 | ||||||
Cognis GMBH | ||||||||
11,000 | 2.30%, 09/15/2013 ± | 9,817 | ||||||
Columbian Chemicals Co. | ||||||||
9,854 | 6.31%, 03/15/2013 ± | 8,351 | ||||||
Hexion Specialty Chemicals | ||||||||
EUR 1,842 | 2.56%, 05/05/2013 ± | 2,060 | ||||||
5,445 | 2.75%, 05/05/2013 ±☼ | 4,233 | ||||||
Hexion Specialty Chemicals, Tranche C-1 Term Loan | ||||||||
40,762 | 2.56%, 05/15/2013 ±☼ | 32,377 | ||||||
Hexion Specialty Chemicals, Tranche C-2 Term Loan | ||||||||
8,856 | 2.56%, 05/15/2013 ±☼ | 7,034 | ||||||
Hexion Specialty Chemicals, Tranche C-5 Term Loan | ||||||||
978 | 2.56%, 05/05/2013 ± | 751 | ||||||
Huntsman International LLC | ||||||||
21,268 | 1.99%, 04/19/2014 ±☼ | 19,279 | ||||||
6,563 | 2.49%, 06/30/2016 ± | 5,944 | ||||||
Ineos Group | ||||||||
20,723 | 7.50%, 12/16/2013 ±☼ | 17,636 | ||||||
20,722 | 8.00%, 12/16/2014 ±☼ | 17,717 | ||||||
Lyondell Chemical Co. | ||||||||
34,281 | 5.80%, 02/03/2010 ±☼Ψ | 32,325 | ||||||
17,690 | 9.17%, 02/03/2010 ±☼Ψ | 18,207 | ||||||
Lyondell Chemical Co., Dutch RC | ||||||||
149 | 3.74%, 12/20/2013 ±Ψ | 84 | ||||||
Lyondell Chemical Co., Dutch Tranche A | ||||||||
342 | 3.74%, 12/20/2013 ±Ψ | 194 | ||||||
Lyondell Chemical Co., German B-1 | ||||||||
428 | 3.99%, 12/20/2014 ±Ψ | 243 | ||||||
Lyondell Chemical Co., German B-2 | ||||||||
428 | 3.99%, 12/20/2014 ±Ψ | 243 | ||||||
Lyondell Chemical Co., German B-3 | ||||||||
428 | 3.99%, 12/20/2014 ±Ψ | 243 | ||||||
Lyondell Chemical Co., Primary RC | ||||||||
560 | 3.74%, 12/20/2013 ±Ψ | 317 | ||||||
Lyondell Chemical Co., Term Loan A | ||||||||
1,066 | 3.74%, 12/20/2013 ±Ψ | 604 | ||||||
Lyondell Chemical Co., U.S. B-1 | ||||||||
$ | 1,859 | 7.00%, 12/20/2014 ±Ψ | 1,053 | |||||
Lyondell Chemical Co., U.S. B-2 | ||||||||
1,859 | 7.00%, 12/20/2014 ±Ψ | 1,053 | ||||||
Lyondell Chemical Co., U.S. B-3 | ||||||||
1,859 | 7.00%, 12/20/2014 ±Ψ | 1,053 | ||||||
MacDermid, Inc. | ||||||||
13,405 | 2.24%, 04/11/2014 ± | 11,394 | ||||||
Texas Petrochemicals L.P., LC Facility Deposits | ||||||||
2,451 | 2.88%, 06/27/2013 ± | 2,163 | ||||||
Texas Petrochemicals L.P., Term Loan B | ||||||||
7,260 | 2.88%, 06/27/2013 ± | 6,407 | ||||||
229,199 | ||||||||
Computer and Electronic Product Manufacturing - 1.5% | ||||||||
Freescale Semiconductor, Inc. | ||||||||
58,772 | 2.00%, 11/28/2013 ±☼ | 47,622 | ||||||
Construction - 0.3% | ||||||||
Contech Construction Products | ||||||||
3,539 | 2.25%, 01/31/2013 ± | 3,103 | ||||||
Custom Building Products | ||||||||
4,585 | 9.00%, 10/20/2011 ± | 4,493 | ||||||
2,000 | 10.75%, 04/20/2012 ± | 1,895 | ||||||
9,491 | ||||||||
Finance and Insurance - 4.5% | ||||||||
BNY Convergex Group LLC & EZE Castle Software, First Lien Term Loan | ||||||||
12,214 | 3.25%, 08/30/2013 ± | 11,741 | ||||||
BNY Convergex Group LLC & EZE Castle Software, Incremental Term Loan | ||||||||
2,192 | 3.25%, 09/30/2013 ± | 2,107 | ||||||
Buckeye Check Cashing, Inc. | ||||||||
8,440 | 2.95%, 05/01/2012 ±⌂ | 3,770 | ||||||
Crescent Resources LLC | ||||||||
15,071 | 0.00%, 09/07/2012 ±Ω | 5,463 | ||||||
Dollar Financial Corp., Delayed Draw Term Loan | ||||||||
4,262 | 3.04%, 10/30/2012 ±☼ | 4,017 | ||||||
Dollar Financial Corp., Term Loan | ||||||||
5,796 | 3.04%, 10/30/2012 ±☼ | 5,462 | ||||||
HMSC Corp. | ||||||||
3,851 | 2.53%, 04/03/2014 ±⌂ | 2,677 | ||||||
Hub International Holdings, Inc. | ||||||||
14,734 | 2.74%, 06/12/2014 - 06/14/2014 ±☼ | 12,911 | ||||||
12,000 | 4.75%, 06/13/2014 ◊☼ | 11,825 | ||||||
LNR Properties Corp. | ||||||||
12,053 | 3.75%, 06/29/2009 - 06/29/2011 ± | 9,564 | ||||||
LPL Holdings, Inc. | ||||||||
5,959 | 1.88%, 12/18/2014 ± | 5,592 | ||||||
MacAndrews Amg Holdings LLC | ||||||||
8,105 | 6.03%, 04/17/2012 ±⌂ | 7,213 | ||||||
Nuveen Investments, Inc. | ||||||||
62,843 | 3.28%, 11/13/2014 ±☼ | 54,135 | ||||||
2,550 | 12.50%, 07/31/2015 ± | 2,596 | ||||||
Sedgwick CMS Holdings, Inc. | ||||||||
5,988 | 2.53%, 01/31/2013 ± | 5,621 | ||||||
144,694 | ||||||||
7
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE♦ - 80.2% - (continued) | ||||||||
Food Manufacturing - 2.7% | ||||||||
American Seafoods Group, Term Loan B Add-On | ||||||||
$ | 1,481 | 4.03%, 09/30/2012 ± | $ | 1,429 | ||||
American Seafoods Group, Tranche B1 Term Loan | ||||||||
7,659 | 3.75%, 09/30/2011 ± | 7,386 | ||||||
American Seafoods Group, Tranche B-2 Term Loan | ||||||||
17,111 | 4.03%, 09/30/2012 ± | 16,507 | ||||||
Dole Food Co., Inc., LC Facility Deposits | ||||||||
3,197 | 0.28%, 04/12/2013 ± | 3,222 | ||||||
Dole Food Co., Inc., Tranche B Term Loan | ||||||||
6,232 | 7.97%, 04/12/2013 ± | 6,281 | ||||||
Dole Food Co., Inc., Tranche C Term Loan | ||||||||
18,629 | 8.00%, 04/12/2013 ± | 18,776 | ||||||
Pinnacle Foods | ||||||||
14,073 | 3.00%, 03/30/2014 ± | 13,154 | ||||||
Roundy’s Supermarkets, Inc. | ||||||||
21,727 | 3.02%, 11/03/2011 ±☼ | 21,401 | ||||||
88,156 | ||||||||
Health Care and Social Assistance - 8.0% | ||||||||
AGA Medical Corp. | ||||||||
5,175 | 2.27%, 04/26/2013 ± | 4,476 | ||||||
Carestream Health, Inc. | ||||||||
6,339 | 2.24%, 04/30/2013 ± | 5,890 | ||||||
Community Health Systems, Inc. | ||||||||
793 | 2.49%, 07/25/2014 ± | 736 | ||||||
15,537 | 2.61%, 07/25/2014 ± | 14,402 | ||||||
DaVita, Inc. | ||||||||
1,538 | 1.75%, 10/05/2011 ± | 1,483 | ||||||
DJO Finance LLC | ||||||||
2,578 | 3.26%, 04/07/2013 ± | 2,475 | ||||||
Generics International, Inc. | ||||||||
2,948 | 3.78%, 11/19/2014 ±⌂ | 2,682 | ||||||
Golden Gate National | ||||||||
9,754 | 2.99%, 03/14/2011 ±☼ | 9,413 | ||||||
2,000 | 7.99%, 09/30/2011 ± | 1,800 | ||||||
HCA, Inc. | ||||||||
33,565 | 2.53%, 11/17/2013 ± | 31,212 | ||||||
HealthSouth Corp. | ||||||||
7,748 | 2.55%, 03/10/2013 ± | 7,410 | ||||||
IASIS Healthcare Capital Corp. | ||||||||
688 | 0.14%, 03/17/2014 ± | 645 | ||||||
17,862 | 5.53%, 06/13/2014 ± | 15,898 | ||||||
IASIS Healthcare Capital Corp., Delayed Draw Term Loan | ||||||||
2,629 | 2.25%, 03/17/2014 ± | 2,465 | ||||||
IASIS Healthcare Capital Corp., Term Loan B | ||||||||
7,598 | 2.24%, 03/17/2014 ± | 7,123 | ||||||
Invacare Corp. | ||||||||
450 | 2.49%, 02/07/2013 ± | 427 | ||||||
Inverness Medical Innovation, Inc. | ||||||||
4,852 | 2.26%, 06/27/2014 ± | 4,556 | ||||||
19,628 | 4.50%, 06/26/2015 ±☼ | 18,974 | ||||||
Multiplan Corp. | ||||||||
13,348 | 2.75%, 04/12/2013 ± | 12,520 | ||||||
National Mentor | ||||||||
397 | 0.12%, 06/27/2013 ± | 353 | ||||||
6,393 | 2.29%, 06/27/2013 ± | 5,698 | ||||||
National Renal Institutes, Inc. | ||||||||
9,955 | 5.00%, 03/31/2013 ± | 8,561 | ||||||
Orthofix Holdings, Inc. | ||||||||
9,472 | 6.75%, 09/22/2013 ± | 9,295 | ||||||
Psychiatric Solutions, Inc. | ||||||||
5,864 | 2.02%, 07/01/2012 ± | 5,545 | ||||||
Select Medical Corp., Extended Add-On | ||||||||
2,315 | 4.16%, 08/22/2014 ± | 2,272 | ||||||
Select Medical Corp., Extended Term Loan | ||||||||
10,663 | 4.16%, 08/22/2014 ± | 10,463 | ||||||
Sheridan Group, Inc. | ||||||||
13,720 | 2.52%, 06/15/2014 ± | 12,485 | ||||||
Skilled Healthcare Group, Inc. | ||||||||
4,839 | 2.28%, 06/15/2012 ± | 4,541 | ||||||
Surgical Care Affiliates LLC | ||||||||
5,865 | 2.30%, 12/29/2014 ± | 5,352 | ||||||
United Surgical Partners International | ||||||||
1,468 | 2.25%, 04/19/2014 ± | 1,364 | ||||||
7,769 | 2.27%, 04/19/2014 ± | 7,218 | ||||||
Vanguard Health Holdings Co. II LLC | ||||||||
13,434 | 2.49%, 09/23/2011 ± | 13,081 | ||||||
Viant Holdings, Inc. | ||||||||
7,142 | 2.54%, 06/25/2014 ± | 6,964 | ||||||
Warner Chilcott, Inc. | ||||||||
6,102 | 3.25%, 10/30/2014 ◊☼ | 6,111 | ||||||
Warner Chilcott, Inc., Delayed Draw | ||||||||
2,136 | 3.50%, 04/30/2015 ◊☼ | 2,140 | ||||||
Warner Chilcott, Inc., Term Loan B | ||||||||
9,763 | 3.50%, 04/30/2015 ◊☼ | 9,777 | ||||||
Youth & Family Centered Services, Inc. | ||||||||
1,908 | 3.75%, 07/10/2013 ± | 1,798 | ||||||
257,605 | ||||||||
Information - 15.5% | ||||||||
Alaska Communication Systems Holdings, Inc. | ||||||||
2,737 | 1.75%, 02/01/2012 ± | 2,611 | ||||||
Alaska Communication Systems Holdings, Inc., Incremental Term Loan | ||||||||
7,038 | 2.03%, 02/01/2012 ± | 6,712 | ||||||
Alaska Communication Systems Holdings, Inc., Term Loan | ||||||||
181 | 2.03%, 02/01/2012 ± | 172 | ||||||
Bresnan Communications LLC | ||||||||
2,000 | 4.50%, 03/29/2014 ± | 1,882 | ||||||
CDW Corp. | ||||||||
20,963 | 3.00%, 10/10/2014 ◊☼ | 17,032 | ||||||
Cebridge Communications LLC | ||||||||
4,512 | 2.23%, 11/05/2013 ± | 4,279 | ||||||
10,000 | 4.79%, 05/05/2014 ± | 9,739 | ||||||
Charter Communications Operating LLC, Incremental Term Loan | ||||||||
14,932 | 9.25%, 03/06/2014 ±☼Ψ | 15,054 | ||||||
Charter Communications Operating LLC, Term Loan | ||||||||
43,329 | 6.25%, 03/06/2014 ±☼Ψ | 39,389 |
8
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE♦ - 80.2% - (continued) | ||||||||
Information - 15.5% - (continued) | ||||||||
CMP Susquehanna Corp. | ||||||||
$ | 8,327 | 2.25%, 05/06/2013 ± | $ | 6,058 | ||||
Cumulus Media, Inc. | ||||||||
10,931 | 4.24%, 06/07/2013 ± | 8,881 | ||||||
CW Media Holdings, Inc. | ||||||||
7,840 | 3.25%, 02/15/2015 ± | 7,146 | ||||||
Emdeon Business Services LLC | ||||||||
5,924 | 2.29%, 11/16/2013 ± | 5,657 | ||||||
13,330 | 5.29%, 05/16/2014 ±☼ | 12,847 | ||||||
First Data Corp. | ||||||||
40,489 | 3.00%, 09/24/2014 ±☼ | 34,803 | ||||||
Gray Television, Inc. | ||||||||
10,931 | 3.79%, 12/31/2014 ± | 9,351 | ||||||
Infor Global Solutions | ||||||||
978 | 3.00%, 07/28/2012 ± | 866 | ||||||
5,000 | 6.49%, 03/02/2014 ± | 3,387 | ||||||
Infor Global Solutions, Delayed Draw Term Loan | ||||||||
1,948 | 4.00%, 07/28/2012 ± | 1,714 | ||||||
Infor Global Solutions, US Term Loan | ||||||||
3,733 | 4.00%, 07/28/2012 ± | 3,285 | ||||||
Intelsat Bermuda Ltd., Term Loan A3 | ||||||||
1,704 | 2.75%, 07/03/2012 ± | 1,626 | ||||||
Intelsat Bermuda Ltd., Term Loan B-2A | ||||||||
9,736 | 2.75%, 01/03/2014 ± | 9,159 | ||||||
Intelsat Bermuda Ltd., Term Loan B-2B | ||||||||
9,729 | 2.75%, 01/03/2014 ± | 9,153 | ||||||
Intelsat Bermuda Ltd., Term Loan B-2C | ||||||||
9,729 | 2.75%, 01/03/2014 ± | 9,153 | ||||||
Intesat Ltd. | ||||||||
3,395 | 2.75%, 07/03/2012 ± | 3,274 | ||||||
13,501 | 3.25%, 02/01/2014 ± | 12,022 | ||||||
Kronos, Inc. | ||||||||
4,677 | 2.28%, 06/12/2014 ± | 4,380 | ||||||
LBI Media, Inc. | ||||||||
8,886 | 1.74%, 05/01/2012 ± | 7,109 | ||||||
Level 3 Communications Corp. | ||||||||
24,441 | 2.53%, 03/01/2014 ±☼ | 21,034 | ||||||
2,720 | 8.50%, 03/13/2014 ± | 2,883 | ||||||
Mediacom Broadband LLC | ||||||||
12,877 | 6.50%, 01/03/2016 ± | 12,900 | ||||||
Mediacom Broadband LLC, Term Loan D1 | ||||||||
3,381 | 1.98%, 01/31/2015 ± | 3,080 | ||||||
Mediacom Broadband LLC, Term Loan D2 | ||||||||
1,311 | 1.98%, 01/31/2015 ± | 1,194 | ||||||
Mediacom LLC | ||||||||
1,620 | 1.48%, 09/30/2012 ± | 1,527 | ||||||
6,766 | 1.73%, 01/31/2015 ± | 6,112 | ||||||
7,000 | 5.50%, 03/31/2017 ± | 7,004 | ||||||
MetroPCS Wireless, Inc. | ||||||||
19,935 | 2.66%, 11/04/2013 ± | 18,640 | ||||||
NEP Supershooters L.P. | ||||||||
7,800 | 2.25%, 02/13/2014 ± | 7,176 | ||||||
Ntelos, Inc. | ||||||||
15,300 | 5.75%, 08/07/2015 ± | 15,338 | ||||||
One Communications Corp. | ||||||||
8,982 | 4.58%, 06/30/2012 ± | 8,174 | ||||||
PAETEC Holding Corp. | ||||||||
2,122 | 2.74%, 02/28/2013 ± | 2,005 | ||||||
Raycom TV Broadcasting, Inc. | ||||||||
14,229 | 1.75%, 06/25/2014 ±⌂ | 11,525 | ||||||
RCN Corp. | ||||||||
9,338 | 2.56%, 04/19/2014 ± | 8,657 | ||||||
Sinclair Broadcast Group, Inc. | ||||||||
5,600 | 4.50%, 10/31/2015 ±☼ | 5,600 | ||||||
Sirius Satellite Radio, Inc. | ||||||||
13,680 | 2.25%, 12/20/2012 ± | 12,599 | ||||||
Telesat Canada, Delayed Draw Term Loan | ||||||||
452 | 3.25%, 09/01/2014 ± | 433 | ||||||
Telesat Canada, Term Loan B | ||||||||
5,927 | 3.25%, 09/01/2014 ± | 5,677 | ||||||
Time Warner Telecom Holdings, Inc. | ||||||||
5 | 2.01%, 01/07/2013 ± | 5 | ||||||
TransFirst Holdings, Inc. | ||||||||
15,216 | 3.04%, 06/12/2014 ±☼ | 13,365 | ||||||
1,018 | 7.04%, 06/12/2015 ± | 753 | ||||||
UPC Financing Partnership | ||||||||
18,122 | 3.75%, 12/31/2016 ± | 17,369 | ||||||
Verint Systems, Inc. | ||||||||
10,318 | 3.50%, 05/23/2014 ± | 9,390 | ||||||
Virgin Media Dover LLC | ||||||||
6,969 | 3.78%, 09/03/2012 ± | 6,882 | ||||||
West Corp. | ||||||||
12,245 | 2.62%, 10/24/2013 ± | 11,174 | ||||||
17,786 | 4.12%, 07/15/2016 ± | 16,619 | ||||||
5,925 | 7.25%, 10/24/2013 ±☼ | 5,928 | ||||||
WideOpenWest Finance LLC | ||||||||
14,925 | 2.76%, 07/01/2014 ± | 13,880 | ||||||
5,674 | 7.30%, 06/29/2015 ± | 4,341 | ||||||
498,005 | ||||||||
Miscellaneous Manufacturing - 1.7% | ||||||||
DAE Aviation Holdings, Inc. | ||||||||
5,091 | 4.03%, 09/27/2014 ± | 4,722 | ||||||
DAE Aviation Holdings, Inc., Term Loan B1 | ||||||||
5,204 | 4.03%, 09/27/2014 ± | 4,827 | ||||||
Graham Packaging Co., Inc. | ||||||||
39,404 | 6.75%, 04/15/2014 ± | 39,338 | ||||||
Vought Aircraft Industries, Inc. | ||||||||
5,791 | 7.50%, 12/22/2010 ± | 5,777 | ||||||
WESCO Aircraft Hardware Corp. | ||||||||
1,384 | 6.00%, 03/28/2014 ±☼ | 1,155 | ||||||
55,819 | ||||||||
Motor Vehicle & Parts Manufacturing - 3.7% | ||||||||
Accuride Corp. | ||||||||
9,500 | 8.00%, 01/31/2012 ±☼Ψ | 9,410 | ||||||
AM General LLC | ||||||||
657 | 0.24%, 09/30/2012 ±☼ | 603 | ||||||
14,220 | 3.27%, 09/30/2013 ±☼ | 13,047 | ||||||
Dana Holding Corp., Term Loan B2 | ||||||||
30,126 | 4.25%, 01/31/2015 ◊☼ | 26,185 | ||||||
Ford Motor Co. | ||||||||
11,954 | 3.25%, 12/16/2013 ± | 10,621 | ||||||
Lear Corp., Delayed Draw Term Loan B | ||||||||
1,009 | 5.50%, 10/21/2014 ◊☼Ψ | 1,016 | ||||||
Lear Corp., Extended Term Loan B | ||||||||
1,009 | 5.50%, 10/21/2014 ◊☼Ψ | 1,016 | ||||||
Lear Corp., Term Loan B | ||||||||
16,287 | 0.00%, 04/25/2012 ◊Ω | 15,652 |
9
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE♦ - 80.2% - (continued) | ||||||||
Motor Vehicle & Parts Manufacturing - 3.7% - (continued) | ||||||||
TRW Automotive, Inc. | ||||||||
$ | 41,113 | 6.25%, 05/09/2013 - 02/09/2014 ±☼ | $ | 40,926 | ||||
118,476 | ||||||||
Other Services - 0.5% | ||||||||
Rental Service Corp. | ||||||||
18,838 | 3.82%, 11/27/2013 ±☼ | 16,926 | ||||||
Paper Manufacturing - 1.6% | ||||||||
Georgia-Pacific Corp. | ||||||||
18,147 | 2.32%, 12/20/2012 ± | 17,434 | ||||||
3,704 | 2.33%, 12/20/2012 ± | 3,558 | ||||||
Georgia-Pacific LLC | ||||||||
12,034 | 3.59%, 12/20/2014 ± | 11,923 | ||||||
Smurfit-Stone Container Enterprises, Inc. | ||||||||
2,655 | 2.55%, 11/01/2011 ±☼Ψ | 2,569 | ||||||
8,005 | 3.07%, 11/01/2011 ±☼Ψ | 7,745 | ||||||
1,607 | 4.50%, 11/01/2011 ±☼Ψ | 1,555 | ||||||
975 | 10.00%, 01/28/2010 ±Ψ | 975 | ||||||
Smurfit-Stone Container Enterprises, Inc., New Term Loan B | ||||||||
1,829 | 2.50%, 11/01/2011 ±☼Ψ | 1,769 | ||||||
Smurfit-Stone Container Enterprises, Inc., New Term Loan C | ||||||||
3,447 | 2.50%, 11/01/2011 ±☼Ψ | 3,335 | ||||||
Smurfit-Stone Container Enterprises, Inc., New Term Loan C-1 | ||||||||
1,042 | 2.50%, 11/01/2011 ±☼Ψ | 1,008 | ||||||
51,871 | ||||||||
Petroleum and Coal Products Manufacturing - 4.3% | ||||||||
Atlas Pipeline Partners L.P. | ||||||||
14,978 | 6.75%, 07/27/2014 ± | 14,566 | ||||||
Big West Oil LLC, Delayed Draw Term Loan | ||||||||
14,043 | 4.50%, 02/02/2015 ±☼Ψ | 13,411 | ||||||
Big West Oil LLC, Term Loan B | ||||||||
11,170 | 6.50%, 05/14/2014 ±☼Ψ | 10,667 | ||||||
Calumet Lubricants Co., L.P. | ||||||||
2,853 | 0.13%, 12/29/2014 ± | 2,534 | ||||||
21,237 | 4.31%, 01/03/2015 ± | 18,861 | ||||||
Coffeyville Resources | ||||||||
26,070 | 8.50%, 12/21/2013 ±☼ | 25,982 | ||||||
Dynegy Holdings, Inc., Letter of Credit | ||||||||
19,599 | 3.75%, 03/30/2013 ± | 18,772 | ||||||
Dynegy Holdings, Inc., Term Loan | ||||||||
1,378 | 4.00%, 03/30/2013 ± | 1,320 | ||||||
Turbo Beta Ltd. | ||||||||
5,113 | 14.50%, 03/12/2018 ±⌂† | 3,579 | ||||||
Western Refining, Inc. | ||||||||
29,469 | 8.25%, 05/30/2014 ±☼ | 28,598 | ||||||
138,290 | ||||||||
Primary Metal Manufacturing - 0.2% | ||||||||
John Maneely Co. | ||||||||
8,641 | 3.51%, 12/08/2013 ± | 7,880 | ||||||
Professional, Scientific and Technical Services - 1.0% | ||||||||
Advantage Sales & Marketing, Inc. | ||||||||
15,491 | 2.29%, 03/29/2013 ± | 14,639 | ||||||
Brand Energy & Infrastructure Services | ||||||||
6,186 | 2.39%, 02/07/2014 ± | 5,663 | ||||||
1,960 | 3.66%, 02/07/2014 ± | 1,810 | ||||||
Southern Graphic Systems, Delayed Draw Term Loan | ||||||||
1,096 | 2.80%, 12/30/2011 ± | 1,022 | ||||||
Southern Graphic Systems, Term Loan | ||||||||
4,449 | 2.50%, 12/30/2011 ± | 4,226 | ||||||
Tensar Corp. | ||||||||
6,636 | 3.78%, 10/28/2012 ± | 5,176 | ||||||
32,536 | ||||||||
Real Estate and Rental and Leasing - 1.7% | ||||||||
Realogy Corp. | ||||||||
12,854 | 3.16%, 10/05/2013 ±☼ | 10,691 | ||||||
53,729 | 3.29%, 10/10/2013 - 10/05/2014 ±☼ | 44,684 | ||||||
55,375 | ||||||||
Retail Trade - 4.4% | ||||||||
David’s Bridal, Inc. | ||||||||
4,342 | 2.00%, 01/25/2014 ± | 4,005 | ||||||
Dollar General Corp. | ||||||||
27,968 | 3.01%, 07/06/2014 ±☼ | 26,643 | ||||||
Dollarama Group L.P. | ||||||||
10,304 | 2.03%, 11/18/2011 ± | 10,008 | ||||||
Easton-Bell Sports, Inc. | ||||||||
9,103 | 2.04%, 03/16/2012 ± | 8,603 | ||||||
Michaels Stores, Inc. | ||||||||
40,765 | 2.52%, 10/31/2013 ±☼ | 36,392 | ||||||
Rite Aid Corp. | ||||||||
15,107 | 2.89%, 06/01/2014 ± | 13,046 | ||||||
9,937 | 3.00%, 06/04/2014 ± | 9,285 | ||||||
12,500 | 9.50%, 06/10/2015 ±☼ | 12,806 | ||||||
Sports Authority, Inc. | ||||||||
6,208 | 2.53%, 04/25/2013 ± | 4,966 | ||||||
Toys R Us, Inc. | ||||||||
16,000 | 4.49%, 07/09/2012 ±☼ | 15,450 | ||||||
141,204 | ||||||||
Services - 0.5% | ||||||||
Clarke American Corp. | ||||||||
18,563 | 2.77%, 02/28/2014 ± | 15,517 | ||||||
Sheridan Group, Inc. | ||||||||
2,000 | 6.00%, 06/15/2015 ± | 1,660 | ||||||
17,177 | ||||||||
Soap, Cleaning Compound and Toilet Manufacturing - 1.1% | ||||||||
Jarden Corp. | ||||||||
8,836 | 3.53%, 01/24/2015 ± | 8,767 | ||||||
Jarden Corp., Term Loan B3 | ||||||||
3,215 | 1.75%, 01/24/2012 ± | 3,133 | ||||||
Philosophy, Inc. | ||||||||
6,276 | 2.25%, 03/17/2014 ± | 5,115 | ||||||
Yankee Candle Co. | ||||||||
18,256 | 2.25%, 02/06/2014 ± | 16,972 | ||||||
33,987 | ||||||||
Textile Mills - 0.3% | ||||||||
Hanesbrands, Inc. | ||||||||
9,983 | 5.03%, 09/05/2011 ± | 9,994 | ||||||
10
Shares or Principal Amount ╬ | Market Value ╪ | |||||||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE♦ - 80.2% - (continued) | ||||||||||||
Textile Product Mills - 0.5% | ||||||||||||
Levi Strauss & Co. | ||||||||||||
$ | 16,878 | 2.50%, 03/09/2014 ± | $ | 15,500 | ||||||||
Toy Manufacturing - 0.1% | ||||||||||||
Mega Bloks, Inc. | ||||||||||||
4,872 | 9.75%, 07/26/2012 ± | 2,696 | ||||||||||
Truck Transportation - 0.4% | ||||||||||||
Cardinal Logistics Management | ||||||||||||
4,808 | 6.72%, 09/23/2013 ±⌂ | 2,164 | ||||||||||
Jacobson Cos. | ||||||||||||
3,910 | 2.75%, 06/19/2014 ± | 3,314 | ||||||||||
Kenan Advantage Group | ||||||||||||
6,882 | 2.99%, 12/16/2011 ± | 6,538 | ||||||||||
12,016 | ||||||||||||
Utilities - 4.6% | ||||||||||||
Astoria Generating Co. Acquisitions LLC | ||||||||||||
5,294 | 2.09%, 02/23/2012 ± | 5,116 | ||||||||||
17,500 | 4.04%, 08/23/2013 ± | 16,115 | ||||||||||
BRSP LLC | ||||||||||||
13,000 | 7.50%, 06/24/2014 ± | 12,187 | ||||||||||
Calpine Corp. | ||||||||||||
48,660 | 3.17%, 03/29/2014 ±☼ | 44,697 | ||||||||||
Kgen LLC | ||||||||||||
1,375 | 0.15%, 02/10/2014 ± | 1,252 | ||||||||||
2,229 | 2.00%, 02/01/2014 ± | 2,062 | ||||||||||
NRG Energy, Inc. | ||||||||||||
24,213 | 0.18%, 02/01/2013 ± | 22,680 | ||||||||||
4,545 | 2.02%, 02/01/2013 ± | 4,257 | ||||||||||
Reliant Energy, Inc. | ||||||||||||
9,000 | 0.23%, 03/31/2014 ± | 8,430 | ||||||||||
Texas Competitive Electric Holdings Co. LLC, Delayed Draw Term Loan | ||||||||||||
8,000 | 3.74%, 10/10/2014 ± | 6,093 | ||||||||||
Texas Competitive Electric Holdings Co. LLC, Term Loan B | ||||||||||||
9,975 | 3.74%, 10/10/2014 ±☼ | 7,707 | ||||||||||
TPF Generation Holdings LLC | ||||||||||||
8,105 | 2.24%, 12/15/2013 ± | 7,656 | ||||||||||
6,314 | 4.50%, 12/21/2014 ± | 5,379 | ||||||||||
TPF Generation Holdings LLC, Letter of Credit | ||||||||||||
2,986 | 0.18%, 12/15/2013 ± | 2,810 | ||||||||||
TPF Generation Holdings LLC, Revolver | ||||||||||||
936 | 0.18%, 12/15/2011 ± | 878 | ||||||||||
147,319 | ||||||||||||
Total senior floating rate interests: non-investment grade (cost $2,679,849) | $ | 2,580,541 | ||||||||||
COMMON STOCKS - 0.0% | ||||||||||||
Utilities - 0.0% | ||||||||||||
4 | Calpine Corp. • | $ | 43 | |||||||||
Total common stocks (cost $–) | $ | 43 | ||||||||||
WARRANTS - 0.0% | ||||||||||||
Media - 0.0% | ||||||||||||
19 | Cumulus Media, Inc. ⌂ | $ | 41 | |||||||||
Total warrants (cost $–) | $ | 41 | ||||||||||
Total long-term investments (cost $3,195,060) | $ | 3,106,767 | ||||||||||
SHORT-TERM INVESTMENTS - 9.7% | ||||||||||||
Investment Pools and Funds - 6.2% | ||||||||||||
139,360 | JP Morgan U.S. Government Money Market Fund | $ | 139,361 | |||||||||
– | State Street Bank U.S. Government Money Market Fund | — | ||||||||||
61,167 | Wells Fargo Advantage Government Money Market Fund | 61,167 | ||||||||||
200,528 | ||||||||||||
Repurchase Agreements - 3.5% | ||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 11/02/2009 in the amount of $57,063, collateralized by U.S. Treasury Bond 5.25% - 7.88%, 2021 - 2029, value of $59,097) | ||||||||||||
$ | 57,063 | 0.06%, 10/30/2009 | 57,063 | |||||||||
RBS Greenwich Capital Markets TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $28,704, collateralized by U.S. Treasury Bond 5.00%, 2037, U.S. Treasury Note 3.13% - 4.63%, 2013 - 2017, value of $ 29,279) | ||||||||||||
28,704 | 0.06%, 10/30/2009 | 28,704 | ||||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 11/02/2009 in the amount of $26,290, collateralized by U.S. Treasury Note 1.50%, 2010, value of $26,649) | ||||||||||||
26,290 | 0.04%, 10/30/2009 | 26,290 | ||||||||||
112,057 | ||||||||||||
Total short-term investments (cost $312,585) | $ | 312,585 | ||||||||||
Total investments (cost $3,507,645) ▲ | 106.3 | % | $ | 3,419,352 | ||||||||
Other assets and liabilities | (6.3 | )% | (203,012 | ) | ||||||||
Total net assets | 100.0 | % | $ | 3,216,340 | ||||||||
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 4.8% of total net assets at October 31, 2009. |
11
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $3,513,123 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 71,663 | ||
Unrealized Depreciation | (165,434 | ) | ||
Net Unrealized Depreciation | $ | (93,771 | ) | |
† | 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 October 31, 2009, was $3,579, which represents 0.11% 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 October 31, 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 October 31, 2009, was $121,695, which represents 3.78% of total net assets. | |
☼ | The cost of securities purchased on a when-issued or delayed delivery basis at October 31, 2009 was $330,127. | |
± | The interest rate disclosed for these securities represents the average coupon as of October 31, 2009. | |
◊ | The interest rate disclosed for these securities represents an estimated average coupon as of October 31, 2009. | |
Ψ | The company is in bankruptcy. The investment held by the fund is current with respect to interest payments. | |
Ω | Debt security in default due to bankruptcy. | |
╬ | All principal amounts are in U.S. dollars unless otherwise indicated. | |
EUR — EURO | ||
t | Senior loans 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 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 | |||||||||
04/2007 | $ | 2,600 | Bayview Financial Acquisition Trust, 2.39%, 05/28/2037 | $ | 2,600 | |||||||
04/2006-05/2008 | $ | 8,440 | Buckeye Check Cashing, Inc., 2.95%, 05/01/2012 | 8,197 | ||||||||
03/2007-10/2009 | $ | 4,808 | Cardinal Logistics Management, 6.72%, 09/23/2013 | 4,713 | ||||||||
03/2006-06/2007 | $ | 11,725 | Caribe Information Investment, Inc., 2.51%, 03/29/2013 | 11,741 | ||||||||
07/2009 | 19 | Cumulus Media, Inc. Warrants | — | |||||||||
03/2007 | $ | 1,463 | F & W Publications, Inc., New Term Loan B, 0.00%, 08/05/2012 | 1,462 | ||||||||
03/2007-08/2007 | $ | 4,500 | F & W Publications, Inc., Second Lien Term Loan, 0.00%, 08/05/2012 | 4,491 | ||||||||
02/2006-11/2006 | $ | 6,950 | F & W Publications, Inc., Tranche B Term Loan, 0.00%, 08/05/2012 | 6,953 | ||||||||
11/2007 | $ | 2,948 | Generics International, Inc., 3.78%, 11/19/2014 | 2,918 | ||||||||
06/2007 | $ | 3,750 | Golden Nugget, Inc., 3.50%, 12/31/2014 | 3,750 | ||||||||
03/2007 | $ | 16,838 | Goldman Sachs Mortgage Securities Corp., 1.74%, 02/01/2012 - Reg D | 16,838 | ||||||||
04/2007 | $ | 3,851 | HMSC Corp., 2.53%, 04/03/2014 | 3,854 | ||||||||
07/2007-09/2007 | $ | 3,500 | Lincoln Industries Corp., 5.25%, 01/10/2015 | 3,473 | ||||||||
04/2007-01/2008 | $ | 8,105 | MacAndrews Amg Holdings LLC, 6.03%, 04/17/2012 | 7,993 | ||||||||
03/2007-05/2007 | $ | 17,697 | MacQuarie Aircraft Leasing Finance S.A., 1.74%, 11/29/2013 | 17,697 | ||||||||
03/2007-06/2009 | $ | 9,792 | MacQuarie Aircraft Leasing Finance S.A., 4.24%, 11/29/2013 | 6,842 | ||||||||
02/2007-05/2007 | $ | 4,000 | Penton Media, Inc., 5.28%, 02/06/2014 | 4,042 | ||||||||
02/2006-05/2007 | $ | 14,229 | Raycom TV Broadcasting, Inc., 1.75%, 06/25/2014 | 14,223 | ||||||||
06/2008-05/2009 | $ | 5,113 | Turbo Beta Ltd., 14.50%, 03/12/2018 | 5,113 | ||||||||
07/2006 | $ | 1,800 | United Site Services, Inc., 0.00%, 06/29/2013 | 1,782 | ||||||||
03/2007 | $ | 2,302 | Wells Fargo Home Equity Trust, 2.49%, 03/25/2037 | 2,206 |
The aggregate value of these securities at October 31, 2009 was $80,672 which represents 2.51% of total net assets. | ||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
12
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Asset & Commercial Mortgage Backed Securities | $ | 12,036 | $ | — | $ | 17 | $ | 12,019 | ||||||||
Common Stocks ‡ | 43 | 43 | — | — | ||||||||||||
Corporate Bonds: Investment Grade | 93,209 | — | 90,209 | 3,000 | ||||||||||||
Corporate Bonds: Non-Investment Grade | 335,241 | — | 331,161 | 4,080 | ||||||||||||
Senior Floating Rate Interests: Investment Grade | 85,656 | — | 85,656 | — | ||||||||||||
Senior Floating Rate Interests: Non-Investment Grade | 2,580,541 | — | 2,546,670 | 33,871 | ||||||||||||
Warrants ‡ | 41 | 41 | — | — | ||||||||||||
Short-Term Investments | 312,585 | 200,528 | 112,057 | — | ||||||||||||
Total | $ | 3,419,352 | $ | 200,612 | $ | 3,165,770 | $ | 52,970 | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. |
Change in | ||||||||||||||||||||
Balance as of | Unrealized | Transfers In | Balance as of | |||||||||||||||||
October 31, | Appreciation | Net Purchases | and/or Out of | October 31, | ||||||||||||||||
2008 | (Depreciation) | (Sales) | Level 3 | 2009 | ||||||||||||||||
Assets: | ||||||||||||||||||||
Asset & Commercial Mortgage Backed Securities | 17,375 | (5,227 | )* | (129 | ) | — | 12,019 | |||||||||||||
Corporate Bonds and Senior Floating Rate Interests | 1,400 | 3,121 | † | 11,028 | 25,402 | 40,951 | ||||||||||||||
Total | $ | 18,775 | $ | (2,106 | ) | $ | 10,899 | $ | 25,402 | $ | 52,970 | |||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $(5,227). | |
† | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $2,927. |
13
Assets: | ||||
Investments in securities, at market value (cost $3,507,645) | $ | 3,419,352 | ||
Cash | 7,111 | |||
Receivables: | ||||
Investment securities sold | 89,675 | |||
Fund shares sold | 30,112 | |||
Dividends and interest | 17,645 | |||
Other assets | 823 | |||
Total assets | 3,564,718 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 332,731 | |||
Fund shares redeemed | 9,773 | |||
Investment management fees | 319 | |||
Dividends | 4,907 | |||
Distribution fees | 258 | |||
Accrued expenses | 390 | |||
Total liabilities | 348,378 | |||
Net assets | $ | 3,216,340 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,901,482 | |||
Accumulated undistributed net investment income | 91 | |||
Accumulated net realized loss on investments and foreign currency transactions | (596,940 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (88,293 | ) | ||
Net assets | $ | 3,216,340 | ||
Shares authorized | 2,400,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.30/$8.56 | ||
Shares outstanding | 153,938 | |||
Net assets | $ | 1,277,011 | ||
Class B: Net asset value per share | $ | 8.30 | ||
Shares outstanding | 5,744 | |||
Net assets | $ | 47,635 | ||
Class C: Net asset value per share | $ | 8.29 | ||
Shares outstanding | 145,375 | |||
Net assets | $ | 1,204,826 | ||
Class I: Net asset value per share | $ | 8.31 | ||
Shares outstanding | 71,631 | |||
Net assets | $ | 594,705 | ||
Class R3: Net asset value per share | $ | 8.31 | ||
Shares outstanding | 345 | |||
Net assets | $ | 2,863 | ||
Class R4: Net asset value per share | $ | 8.30 | ||
Shares outstanding | 165 | |||
Net assets | $ | 1,367 | ||
Class R5: Net asset value per share | $ | 8.30 | ||
Shares outstanding | 3 | |||
Net assets | $ | 26 | ||
Class Y: Net asset value per share | $ | 8.29 | ||
Shares outstanding | 10,605 | |||
Net assets | $ | 87,907 | ||
14
Investment Income: | ||||
Dividends | $ | 67 | ||
Interest | 147,334 | |||
Total investment income | 147,401 | |||
Expenses: | ||||
Investment management fees | 13,464 | |||
Administrative services fees | 3 | |||
Transfer agent fees | 1,955 | |||
Distribution fees | ||||
Class A | 2,257 | |||
Class B | 400 | |||
Class C | 9,031 | |||
Class R3 | 6 | |||
Class R4 | 2 | |||
Custodian fees | 13 | |||
Accounting services fees | 396 | |||
Registration and filing fees | 235 | |||
Board of Directors’ fees | 49 | |||
Audit fees | 52 | |||
Other expenses | 403 | |||
Total expenses (before waivers and fees paid indirectly) | 28,266 | |||
Expense waivers | (187 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (187 | ) | ||
Total expenses, net | 28,079 | |||
Net Investment Income | 119,322 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (267,731 | ) | ||
Net realized gain on swap contracts | 1,109 | |||
Net realized loss on forward foreign currency contracts | (8 | ) | ||
Net realized loss on other foreign currency transactions | (58 | ) | ||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (266,688 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 639,542 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | — | |||
Net Changes in Unrealized Appreciation of Investments | 639,542 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 372,854 | |||
Net Increase in Net Assets Resulting from Operations | $ | 492,176 | ||
15
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 119,322 | $ | 177,819 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (266,688 | ) | (277,685 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 639,542 | (590,548 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 492,176 | (690,414 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (53,638 | ) | (76,620 | ) | ||||
Class B | (2,125 | ) | (2,991 | ) | ||||
Class C | (47,852 | ) | (71,154 | ) | ||||
Class I | (16,994 | ) | (16,773 | ) | ||||
Class R3 | (66 | ) | (28 | ) | ||||
Class R4 | (44 | ) | (24 | ) | ||||
Class R5 | (2 | ) | (10 | ) | ||||
Class Y | (5,074 | ) | (6,697 | ) | ||||
Total distributions | (125,795 | ) | (174,297 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 388,745 | (918,574 | ) | |||||
Class B | 930 | (14,370 | ) | |||||
Class C | 187,496 | (608,974 | ) | |||||
Class I | 374,025 | (155,838 | ) | |||||
Class R3 | 2,082 | 436 | ||||||
Class R4 | 719 | 657 | ||||||
Class R5 | (63 | ) | (76 | ) | ||||
Class Y | (20,269 | ) | 26,618 | |||||
Net increase (decrease) from capital share transactions | 933,665 | (1,670,121 | ) | |||||
Net Increase (Decrease) In Net Assets | 1,300,046 | (2,534,832 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 1,916,294 | 4,451,126 | ||||||
End of period | $ | 3,216,340 | $ | 1,916,294 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 91 | $ | 6,630 | ||||
16
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 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 |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
security’s primary market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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. 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 Valuation Time. 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 are 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. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service may be 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 generally valued at amortized cost, which approximates market value. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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 |
18
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions – Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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 |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | Forward Foreign Currency Contracts – The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had no outstanding forward foreign currency contracts as of October 31, 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 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, |
20
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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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. The Fund, as shown on the Schedule of Investments, had when-issued or delayed delivery securities as of October 31, 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) | 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 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) | Credit Default Swaps – The Fund is subject to credit risk in the normal course of pursuing its investment objectives. The Fund may enter into event linked swaps, including credit default swap contracts. The credit default swap market allows the Fund to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults of corporate and sovereign issuers, or to create exposure to corporate or sovereign issuers to which it is not otherwise exposed. Certain credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying security in the event of a credit event, such as payment default or bankruptcy. |
21
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
Under a credit default swap, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying security at par if the defined credit event occurs. Upon the occurrence of a defined credit event, the difference between the value of the reference obligation and the swap’s notional amount is recorded as realized gain or loss on swap transactions in the Statement of Operations. 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. This risk is mitigated by having a master netting arrangement between the Fund and the counterparty (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities) or by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty. The Fund will generally not buy protection on issuers that are not currently held by the Fund. The Fund had no outstanding credit default swaps as of October 31, 2009. | |||
n) | Interest Rate Swaps – The Fund is subject to interest rate risk exposure in the normal course of pursuing its investment objectives. Because the Fund holds fixed rate bonds, the value of these bonds may decrease if interest rates rise. To help hedge against this risk and to maintain its ability to generate income at prevailing market rates, the Fund may enter into interest rate swap contracts. In a typical interest rate swap, one party agrees to make regular payments equal to a floating interest rate, based on a specified interest rate benchmark (i.e. LIBOR, etc.), 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. The net interest received or paid on interest rate swap agreements is accrued daily as interest income/expense. Interest rate swaps are marked-to-market daily and the change, if any, is recorded as an unrealized gain or loss in the Statement of Operations. When the interest rate swap contract is terminated early, the Fund records a realized gain or loss equal to the difference between the current realized value and the expected cash flows. | ||
If an interest rate swap agreement provides for payments in different currencies, the parties might agree to exchange the notional principal amount as well. Interest rate swaps may also depend on other prices or rates, such as the value of an index or mortgage prepayment rates. The risks of interest rate swaps include changes in market conditions which will affect the value of the contract or the cash flows and the possible inability of the counterparty to fulfill its obligations under the agreement. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the contract’s remaining life, to the extent that amount is positive. This risk may be mitigated by having a master netting arrangement between the Fund and the counterparty or by posting collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty. As of October 31, 2009, the Fund had no outstanding interest rate swaps. | |||
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) | Additional Derivative Instrument(s) Information | ||
The volume of derivative activity was minimal during the year ended October 31, 2009. | |||
Realized Gain/Loss on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | (8 | ) | $ | — | $ | (8 | ) | ||||||||||
Credit contracts | — | — | — | — | 1,109 | 1,109 | ||||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | (8 | ) | $ | 1,109 | $ | 1,101 | |||||||||||
22
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. | Federal Income Taxes: |
a) | Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) – Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings – 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 124,577 | $ | 179,028 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 5,348 | ||
Accumulated Capital Losses * | (591,462 | ) | ||
Unrealized Depreciation † | (93,771 | ) | ||
Total Accumulated Deficit | $ | (679,885 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts – The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to |
23
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
decrease accumulated undistributed net investment income by $66 and increase accumulated net realized gain on investments by $66. | |||
e) | Capital Loss Carryforward – At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2014 | $ | 1,227 | ||
2015 | 48,277 | |||
2016 | 270,204 | |||
2017 | 271,754 | |||
Total | $ | 591,462 | ||
f) | Accounting for Uncertainty in Income Taxes – Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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% |
24
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 year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
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 | 0.74 | 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 | 0.68 | 0.69 | 0.68 | 0.15 | 0.01 | * |
* | 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. |
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $2,292 and contingent deferred sales charges of $527 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $83. These commissions are in turn paid to sales representatives of the broker/dealers. |
25
Notes to Financial Statements — (continued)
October 31, 2009
(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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was in the amount of $5. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $1,933 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 2,272,034 | ||
Sales Proceeds Excluding U.S. Government Obligations | 1,128,240 |
6. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | Shares | Reinvested | Shares | from | (Decrease) of | ||||||||||||||||||||||||||||||||
Shares Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 138,780 | 4,835 | (91,865 | ) | — | 51,750 | 42,614 | 5,242 | (149,657 | ) | — | (101,801 | ) | |||||||||||||||||||||||||||
Amount | $ | 1,023,678 | $ | 36,108 | $ | (671,041 | ) | $ | — | $ | 388,745 | $ | 388,034 | $ | 47,024 | $ | (1,353,632 | ) | $ | — | $ | (918,574 | ) | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,362 | 177 | (1,465 | ) | — | 74 | 1,045 | 190 | (2,862 | ) | — | (1,627 | ) | |||||||||||||||||||||||||||
Amount | $ | 10,042 | $ | 1,295 | $ | (10,407 | ) | $ | — | $ | 930 | $ | 9,526 | $ | 1,692 | $ | (25,588 | ) | $ | — | $ | (14,370 | ) | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 52,419 | 4,241 | (34,239 | ) | — | 22,421 | 22,066 | 5,084 | (95,489 | ) | — | (68,339 | ) | |||||||||||||||||||||||||||
Amount | $ | 397,823 | $ | 31,106 | $ | (241,433 | ) | $ | — | $ | 187,496 | $ | 202,059 | $ | 45,465 | $ | (856,498 | ) | $ | — | $ | (608,974 | ) | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 66,941 | 1,663 | (20,946 | ) | — | 47,658 | 22,355 | 1,270 | (41,211 | ) | — | (17,586 | ) | |||||||||||||||||||||||||||
Amount | $ | 519,084 | $ | 12,554 | $ | (157,613 | ) | $ | — | $ | 374,025 | $ | 201,916 | $ | 11,319 | $ | (369,073 | ) | $ | — | $ | (155,838 | ) | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 317 | 9 | (57 | ) | — | 269 | 49 | 3 | (5 | ) | — | 47 | ||||||||||||||||||||||||||||
Amount | $ | 2,435 | $ | 66 | $ | (419 | ) | $ | — | $ | 2,082 | $ | 451 | $ | 29 | $ | (44 | ) | $ | — | $ | 436 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 121 | 6 | (34 | ) | — | 93 | 85 | 3 | (17 | ) | — | 71 | ||||||||||||||||||||||||||||
Amount | $ | 926 | $ | 44 | $ | (251 | ) | $ | — | $ | 719 | $ | 782 | $ | 25 | $ | (150 | ) | $ | — | $ | 657 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | (10 | ) | — | (10 | ) | 1 | 1 | (10 | ) | — | (8 | ) | ||||||||||||||||||||||||||
Amount | $ | 5 | $ | 2 | $ | (70 | ) | $ | — | $ | (63 | ) | $ | 6 | $ | 9 | $ | (91 | ) | $ | — | $ | (76 | ) | ||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,244 | 638 | (7,066 | ) | — | (3,184 | ) | 3,794 | 635 | (1,350 | ) | — | 3,079 | |||||||||||||||||||||||||||
Amount | $ | 23,981 | $ | 4,618 | $ | (48,868 | ) | $ | — | $ | (20,269 | ) | $ | 32,823 | $ | 5,625 | $ | (11,830 | ) | $ | — | $ | 26,618 |
26
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 89 | $ | 654 | |||||
For the Year Ended October 31, 2008 | 65 | $ | 561 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. | ||
9. | Pending Legal Proceedings: | |
In July 2007, the Fund and more than 60 other lenders (known collectively as the “Transeastern Lenders”) accepted the payoff of a guarantee from Tousa, Inc. (“Tousa”), a Florida homebuilder. In order to fund the payoff, Tousa borrowed money from certain new lenders and secured the loan by granting liens to the new lenders on the assets of certain Tousa subsidiaries (the “Subsidiaries”). Tousa entered bankruptcy in January of 2008. In July, 2008, a committee of creditors of the Subsidiaries (the “Committee”) brought suit against the Transeastern Lenders, alleging that the Subsidiaries had received no benefit in return for the liens on their assets, that the Subsidiaries were co-borrowers on the loan from the new lenders, and that the Transeastern Lenders received the value of the liens when the Transeastern Lenders accepted the payoff. The Subsidiaries sought the avoidance of their liens and the return of the value of those liens to the bankruptcy estate. On October 13, 2009, the bankruptcy court in the Southern District of Florida ruled in favor of the Committee, avoided the liens, and ordered the Transeastern Lenders to return the payoff amount to the bankruptcy estate. The Transeastern Lenders, together with the Fund, have appealed the decision. If the bankruptcy court’s decision is upheld on appeal, the Fund would be liable for $3.02 million. Management of the Fund believes resolution of this matter will not have a material impact on the Fund’s financial statements. | ||
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
27
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.13 | $ | 0.42 | $ | — | $ | 1.19 | $ | 1.61 | $ | (0.44 | ) | $ | — | $ | — | $ | (0.44 | ) | $ | 1.17 | $ | 8.30 | ||||||||||||||||||||
B | 7.13 | 0.37 | — | 1.19 | 1.56 | (0.39 | ) | — | — | (0.39 | ) | 1.17 | 8.30 | |||||||||||||||||||||||||||||||
C | 7.13 | 0.36 | — | 1.19 | 1.55 | (0.39 | ) | — | — | (0.39 | ) | 1.16 | 8.29 | |||||||||||||||||||||||||||||||
I | 7.13 | 0.43 | — | 1.21 | 1.64 | (0.46 | ) | — | — | (0.46 | ) | 1.18 | 8.31 | |||||||||||||||||||||||||||||||
R3 | 7.14 | 0.40 | — | 1.19 | 1.59 | (0.42 | ) | — | — | (0.42 | ) | 1.17 | 8.31 | |||||||||||||||||||||||||||||||
R4 | 7.13 | 0.42 | — | 1.19 | 1.61 | (0.44 | ) | — | — | (0.44 | ) | 1.17 | 8.30 | |||||||||||||||||||||||||||||||
R5 | 7.15 | 0.48 | — | 1.12 | 1.60 | (0.45 | ) | — | — | (0.45 | ) | 1.15 | 8.30 | |||||||||||||||||||||||||||||||
Y | 7.13 | 0.45 | — | 1.17 | 1.62 | (0.46 | ) | — | — | (0.46 | ) | 1.16 | 8.29 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 9.79 | 0.55 | — | (2.68 | ) | (2.13 | ) | (0.53 | ) | — | — | (0.53 | ) | (2.66 | ) | 7.13 | ||||||||||||||||||||||||||||
B | 9.79 | 0.47 | — | (2.67 | ) | (2.20 | ) | (0.46 | ) | — | — | (0.46 | ) | (2.66 | ) | 7.13 | ||||||||||||||||||||||||||||
C | 9.78 | 0.47 | — | (2.66 | ) | (2.19 | ) | (0.46 | ) | — | — | (0.46 | ) | (2.65 | ) | 7.13 | ||||||||||||||||||||||||||||
I | 9.79 | 0.57 | — | (2.68 | ) | (2.11 | ) | (0.55 | ) | — | — | (0.55 | ) | (2.66 | ) | 7.13 | ||||||||||||||||||||||||||||
R3 | 9.79 | 0.52 | — | (2.66 | ) | (2.14 | ) | (0.51 | ) | — | — | (0.51 | ) | (2.65 | ) | 7.14 | ||||||||||||||||||||||||||||
R4 | 9.78 | 0.54 | — | (2.66 | ) | (2.12 | ) | (0.53 | ) | — | — | (0.53 | ) | (2.65 | ) | 7.13 | ||||||||||||||||||||||||||||
R5 | 9.81 | 0.56 | — | (2.68 | ) | (2.12 | ) | (0.54 | ) | — | — | (0.54 | ) | (2.66 | ) | 7.15 | ||||||||||||||||||||||||||||
Y | 9.78 | 0.57 | — | (2.66 | ) | (2.09 | ) | (0.56 | ) | — | — | (0.56 | ) | (2.65 | ) | 7.13 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.11 | 0.66 | — | (0.31 | ) | 0.35 | (0.67 | ) | — | — | (0.67 | ) | (0.32 | ) | 9.79 | |||||||||||||||||||||||||||||
B | 10.11 | 0.58 | — | (0.31 | ) | 0.27 | (0.59 | ) | — | — | (0.59 | ) | (0.32 | ) | 9.79 | |||||||||||||||||||||||||||||
C | 10.11 | 0.59 | — | (0.32 | ) | 0.27 | (0.60 | ) | — | — | (0.60 | ) | (0.33 | ) | 9.78 | |||||||||||||||||||||||||||||
I | 10.11 | 0.70 | — | (0.32 | ) | 0.38 | (0.70 | ) | — | — | (0.70 | ) | (0.32 | ) | 9.79 | |||||||||||||||||||||||||||||
R3(e) | 10.09 | 0.54 | — | (0.31 | ) | 0.23 | (0.53 | ) | — | — | (0.53 | ) | (0.30 | ) | 9.79 | |||||||||||||||||||||||||||||
R4(e) | 10.09 | 0.56 | — | (0.32 | ) | 0.24 | (0.55 | ) | — | — | (0.55 | ) | (0.31 | ) | 9.78 | |||||||||||||||||||||||||||||
R5(e) | 10.09 | 0.58 | — | (0.29 | ) | 0.29 | (0.57 | ) | — | — | (0.57 | ) | (0.28 | ) | 9.81 | |||||||||||||||||||||||||||||
Y | 10.11 | 0.69 | — | (0.32 | ) | 0.37 | (0.70 | ) | — | — | (0.70 | ) | (0.33 | ) | 9.78 | |||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.09 | 0.62 | — | 0.02 | 0.64 | (0.62 | ) | — | — | (0.62 | ) | 0.02 | 10.11 | |||||||||||||||||||||||||||||||
B | 10.08 | 0.54 | — | 0.03 | 0.57 | (0.54 | ) | — | — | (0.54 | ) | 0.03 | 10.11 | |||||||||||||||||||||||||||||||
C | 10.08 | 0.55 | — | 0.03 | 0.58 | (0.55 | ) | — | — | (0.55 | ) | 0.03 | 10.11 | |||||||||||||||||||||||||||||||
I(h) | 10.11 | 0.12 | — | — | 0.12 | (0.12 | ) | — | — | (0.12 | ) | — | 10.11 | |||||||||||||||||||||||||||||||
Y | 10.08 | 0.66 | — | 0.02 | 0.68 | (0.65 | ) | — | — | (0.65 | ) | 0.03 | 10.11 | |||||||||||||||||||||||||||||||
From (commencement of operations) April 29, 2005, through October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A(i) | 10.00 | 0.22 | — | 0.08 | 0.30 | (0.21 | ) | — | — | (0.21 | ) | 0.09 | 10.09 | |||||||||||||||||||||||||||||||
B(i) | 10.00 | 0.19 | — | 0.08 | 0.27 | (0.19 | ) | — | — | (0.19 | ) | 0.08 | 10.08 | |||||||||||||||||||||||||||||||
C(i) | 10.00 | 0.18 | — | 0.09 | 0.27 | (0.19 | ) | — | — | (0.19 | ) | 0.08 | 10.08 | |||||||||||||||||||||||||||||||
Y(i) | 10.00 | 0.23 | — | 0.08 | 0.31 | (0.23 | ) | — | — | (0.23 | ) | 0.08 | 10.08 |
(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) | Commenced operations on December 22, 2006. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on August 31, 2006. | |
(i) | Commenced operations on April 29, 2005. |
28
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||
23.65 | % | $ | 1,277,011 | 1.00 | % | 1.00 | % | 1.00 | % | 5.69 | % | 55 | % | |||||||||||||||
22.60 | 47,635 | 1.84 | 1.75 | 1.75 | 5.00 | — | ||||||||||||||||||||||
22.60 | 1,204,826 | 1.76 | 1.75 | 1.75 | 4.99 | — | ||||||||||||||||||||||
23.93 | 594,705 | 0.74 | 0.74 | 0.74 | 5.94 | — | ||||||||||||||||||||||
23.17 | 2,863 | 1.41 | 1.25 | 1.25 | 5.36 | — | ||||||||||||||||||||||
23.50 | 1,367 | 1.10 | 1.00 | 1.00 | 5.70 | — | ||||||||||||||||||||||
23.32 | 26 | 0.97 | 0.85 | 0.85 | 5.99 | — | ||||||||||||||||||||||
23.87 | 87,907 | 0.68 | 0.68 | 0.68 | 6.12 | — | ||||||||||||||||||||||
(22.71 | ) | 728,882 | 0.99 | 0.99 | 0.99 | 6.02 | 18 | |||||||||||||||||||||
(23.30 | ) | 40,440 | 1.81 | 1.75 | 1.75 | 5.23 | — | |||||||||||||||||||||
(23.24 | ) | 876,501 | 1.75 | 1.75 | 1.75 | 5.25 | — | |||||||||||||||||||||
(22.51 | ) | 171,007 | 0.74 | 0.74 | 0.74 | 6.28 | — | |||||||||||||||||||||
(22.80 | ) | 544 | 1.45 | 1.25 | 1.25 | 5.63 | — | |||||||||||||||||||||
(22.63 | ) | 515 | 1.15 | 1.00 | 1.00 | 5.71 | — | |||||||||||||||||||||
(22.55 | ) | 90 | 0.86 | 0.85 | 0.85 | 6.24 | — | |||||||||||||||||||||
(22.39 | ) | 98,315 | 0.69 | 0.69 | 0.69 | 6.23 | — | |||||||||||||||||||||
3.54 | 1,996,644 | 0.96 | 0.96 | 0.96 | 6.61 | 62 | ||||||||||||||||||||||
2.72 | 71,403 | 1.80 | 1.75 | 1.75 | 5.84 | — | ||||||||||||||||||||||
2.67 | 1,870,911 | 1.74 | 1.74 | 1.74 | 5.86 | — | ||||||||||||||||||||||
3.84 | 406,906 | 0.71 | 0.71 | 0.71 | 6.88 | — | ||||||||||||||||||||||
2.31 | (f) | 285 | 1.75 | (g) | 1.25 | (g) | 1.25 | (g) | 6.59 | (g) | — | |||||||||||||||||
2.42 | (f) | 10 | 1.18 | (g) | 1.00 | (g) | 1.00 | (g) | 6.58 | (g) | — | |||||||||||||||||
2.90 | (f) | 205 | 0.86 | (g) | 0.85 | (g) | 0.85 | (g) | 6.81 | (g) | — | |||||||||||||||||
3.73 | 104,762 | 0.68 | 0.68 | 0.68 | 6.92 | — | ||||||||||||||||||||||
6.56 | 1,500,394 | 0.98 | 0.50 | 0.50 | 6.71 | 33 | ||||||||||||||||||||||
5.79 | 42,182 | 1.83 | 1.35 | 1.35 | 5.84 | — | ||||||||||||||||||||||
5.86 | 828,910 | 1.77 | 1.28 | 1.28 | 5.93 | — | ||||||||||||||||||||||
1.21 | (f) | 61,805 | 0.74 | (g) | 0.43 | (g) | 0.43 | (g) | 7.99 | (g) | — | |||||||||||||||||
7.00 | 50,896 | 0.65 | 0.15 | 0.15 | 6.89 | — | ||||||||||||||||||||||
3.06 | (f) | 169,485 | 1.03 | (g) | 0.29 | (g) | 0.29 | (g) | 5.68 | (g) | 15 | |||||||||||||||||
2.66 | (f) | 5,659 | 1.89 | (g) | 1.04 | (g) | 1.04 | (g) | 4.91 | (g) | — | |||||||||||||||||
2.67 | (f) | 92,710 | 1.79 | (g) | 1.02 | (g) | 1.02 | (g) | 5.03 | (g) | — | |||||||||||||||||
3.10 | (f) | 10,062 | 0.73 | (g) | 0.01 | (g) | 0.01 | (g) | 6.06 | (g) | — |
29
December 15, 2009
30
31
Directors and Officers (Unaudited) — (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
32
33
QII* | 100.00 | % |
* | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.441 | N/A | N/A | 0.441 | ||||||||||||
Class B | 0.387 | N/A | N/A | 0.387 | ||||||||||||
Class C | 0.387 | N/A | N/A | 0.387 | ||||||||||||
Class I | 0.458 | N/A | N/A | 0.458 | ||||||||||||
Class R3 | 0.423 | N/A | N/A | 0.423 | ||||||||||||
Class R4 | 0.441 | N/A | N/A | 0.441 | ||||||||||||
Class R5 | 0.451 | N/A | N/A | 0.451 | ||||||||||||
Class Y | 0.463 | N/A | N/A | 0.463 |
34
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,171.20 | $ | 5.42 | $ | 1,000.00 | $ | 1,020.21 | $ | 5.04 | 0.99 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,168.50 | $ | 9.57 | $ | 1,000.00 | $ | 1,016.38 | $ | 8.89 | 1.75 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,167.10 | $ | 9.56 | $ | 1,000.00 | $ | 1,016.38 | $ | 8.89 | 1.75 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,174.00 | $ | 4.00 | $ | 1,000.00 | $ | 1,021.53 | $ | 3.72 | 0.73 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,171.20 | $ | 6.84 | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1.25 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,172.80 | $ | 5.48 | $ | 1,000.00 | $ | 1,020.16 | $ | 5.09 | 1.00 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,171.90 | $ | 4.65 | $ | 1,000.00 | $ | 1,020.92 | $ | 4.33 | 0.85 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,173.20 | $ | 3.45 | $ | 1,000.00 | $ | 1,022.03 | $ | 3.21 | 0.63 | 184 | 365 |
35
36
37
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
38
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Fundamental Growth Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
20 | ||||
22 | ||||
23 | ||||
25 | ||||
25 | ||||
26 | ||||
27 | ||||
28 |
The Hartford Fundamental Growth Fund inception 05/24/2001 | ||
(subadvised by Wellington Management Company, LLP) | Investment objective – Seeks long-term capital appreciation. |
Performance Overview(1) 5/24/01 - 10/31/09 Growth of a $10,000 investment in Class A which includes Sales Charge |
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
Fundamental Growth A# | 19.95 | % | 2.48 | % | 0.39 | % | ||||||
Fundamental Growth A## | 13.35 | % | 1.33 | % | -0.28 | % | ||||||
Fundamental Growth B# | 19.22 | % | 1.75 | % | NA | * | ||||||
Fundamental Growth B## | 14.22 | % | 1.39 | % | NA | * | ||||||
Fundamental Growth C# | 19.08 | % | 1.72 | % | -0.34 | % | ||||||
Fundamental Growth C## | 18.08 | % | 1.72 | % | -0.34 | % | ||||||
Fundamental Growth Y# | 20.49 | % | 2.98 | % | 0.86 | % | ||||||
Russell 1000 Growth Index | 17.51 | % | 1.27 | % | -1.50 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Francis J. Boggan, CFA
Senior Vice President, Partner
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Basic Materials (Materials) | 0.7 | % | ||
Capital Goods (Industrials) | 9.1 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 2.1 | |||
Consumer Services (Consumer Discretionary) | 1.9 | |||
Diversified Financials (Financials) | 1.9 | |||
Energy (Energy) | 5.8 | |||
Food & Staples Retailing (Consumer Staples) | 4.2 | |||
Food, Beverage & Tobacco (Consumer Staples) | 2.3 | |||
Health Care Equipment & Services (Health Care) | 5.3 | |||
Household & Personal Products (Consumer Staples) | 3.5 | |||
Insurance (Financials) | 4.2 | |||
Materials (Materials) | 1.0 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 11.6 | |||
Retailing (Consumer Discretionary) | 6.0 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 2.9 | |||
Software & Services (Information Technology) | 16.2 | |||
Technology Hardware & Equipment (Information Technology) | 18.0 | |||
Transportation (Industrials) | 2.4 | |||
Short-Term Investments | 0.4 | |||
Other Assets and Liabilities | 0.5 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 99.1% | ||||||||
Basic Materials - 0.7% | ||||||||
2 | Rio Tinto plc ADR | $ | 356 | |||||
Capital Goods - 9.1% | ||||||||
23 | Deere & Co. | 1,061 | ||||||
8 | Flowserve Corp. | 806 | ||||||
14 | Fluor Corp. | 617 | ||||||
31 | Honeywell International, Inc. | 1,109 | ||||||
9 | Precision Castparts Corp. | 860 | ||||||
20 | WESCO International, Inc. • | 506 | ||||||
4,959 | ||||||||
Consumer Durables & Apparel - 2.1% | ||||||||
20 | Coach, Inc. | 653 | ||||||
46 | D.R. Horton, Inc. | 503 | ||||||
1,156 | ||||||||
Consumer Services - 1.9% | ||||||||
5 | Apollo Group, Inc. Class A • | 297 | ||||||
13 | McDonald’s Corp. | 738 | ||||||
1,035 | ||||||||
Diversified Financials - 1.9% | ||||||||
21 | Ameriprise Financial, Inc. | 711 | ||||||
2 | Goldman Sachs Group, Inc. | 289 | ||||||
1,000 | ||||||||
Energy - 5.8% | ||||||||
14 | Apache Corp. | 1,346 | ||||||
26 | Noble Corp. | 1,047 | ||||||
11 | Petroleo Brasileiro S.A. ADR | 513 | ||||||
5 | Ultra Petroleum Corp. • | 233 | ||||||
3,139 | ||||||||
Food & Staples Retailing - 4.2% | ||||||||
29 | CVS/Caremark Corp. | 1,020 | ||||||
25 | Wal-Mart Stores, Inc. | 1,232 | ||||||
2,252 | ||||||||
Food, Beverage & Tobacco - 2.3% | ||||||||
20 | PepsiCo, Inc. | 1,217 | ||||||
Health Care Equipment & Services - 5.3% | ||||||||
18 | Covidien plc | 750 | ||||||
8 | Express Scripts, Inc. • | 631 | ||||||
25 | St. Jude Medical, Inc. • | 835 | ||||||
26 | UnitedHealth Group, Inc. | 670 | ||||||
2,886 | ||||||||
Household & Personal Products - 3.5% | ||||||||
9 | Colgate-Palmolive Co. | 723 | ||||||
20 | Procter & Gamble Co. | 1,149 | ||||||
1,872 | ||||||||
Insurance - 4.2% | ||||||||
22 | Aflac, Inc. | 896 | ||||||
11 | Allstate Corp. | 337 | ||||||
62 | Assured Guaranty Ltd. | 1,025 | ||||||
2,258 | ||||||||
Materials - 1.0% | ||||||||
16 | Barrick Gold Corp. | 564 | ||||||
Pharmaceuticals, Biotechnology & Life Sciences - 11.6% | ||||||||
22 | Abbott Laboratories | 1,128 | ||||||
4 | Amgen, Inc. • | 220 | ||||||
25 | AstraZeneca plc ADR | 1,123 | ||||||
15 | Celgene Corp. • | 786 | ||||||
9 | Cephalon, Inc. • | 475 | ||||||
61 | Pfizer, Inc. | 1,039 | ||||||
15 | Teva Pharmaceutical Industries Ltd. ADR | 777 | ||||||
17 | Thermo Fisher Scientific, Inc. • | 743 | ||||||
6,291 | ||||||||
Retailing - 6.0% | ||||||||
24 | Best Buy Co., Inc. | 928 | ||||||
7 | Kohl’s Corp. • | 423 | ||||||
25 | Lowe’s Co., Inc. | 489 | ||||||
16 | Nordstrom, Inc. | 499 | ||||||
21 | Staples, Inc. | 456 | ||||||
15 | The Buckle, Inc. | 447 | ||||||
3,242 | ||||||||
Semiconductors & Semiconductor Equipment - 2.9% | ||||||||
35 | Intel Corp. | 669 | ||||||
72 | Micron Technology, Inc. • | 491 | ||||||
18 | Texas Instruments, Inc. | 417 | ||||||
1,577 | ||||||||
Software & Services - 16.2% | ||||||||
15 | Accenture plc | 545 | ||||||
9 | Alliance Data Systems Corp. • | 467 | ||||||
37 | eBay, Inc. • | 833 | ||||||
3 | Google, Inc. • | 1,405 | ||||||
14 | Longtop Financial Technologies Ltd. • | 376 | ||||||
78 | Microsoft Corp. | 2,174 | ||||||
52 | Oracle Corp. | 1,087 | ||||||
24 | VeriSign, Inc. • | 545 | ||||||
10 | Visa, Inc. | 773 | ||||||
29 | Western Union Co. | 529 | ||||||
8,734 | ||||||||
Technology Hardware & Equipment - 18.0% | ||||||||
10 | Apple, Inc. • | 1,809 | ||||||
78 | Cisco Systems, Inc. • | 1,776 | ||||||
50 | Corning, Inc. | 729 | ||||||
52 | EMC Corp. • | 852 | ||||||
33 | Hewlett-Packard Co. | 1,585 | ||||||
14 | IBM Corp. | 1,725 | ||||||
21 | Qualcomm, Inc. | 857 | ||||||
6 | Research In Motion Ltd. • | 358 | ||||||
9,691 | ||||||||
Transportation - 2.4% | ||||||||
19 | Norfolk Southern Corp. | 862 | ||||||
8 | United Parcel Service, Inc. Class B | 408 | ||||||
1,270 | ||||||||
Total common stocks (cost $47,432) | $ | 53,499 | ||||||
Total long-term investments (cost $47,432) | $ | 53,499 | ||||||
4
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS - 0.4% | ||||||||||||
Repurchase Agreements - 0.4% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $9, collateralized by GNMA 5.00%, 2039, value of $9) | ||||||||||||
$ | 8 | 0.08%, 10/30/2009 | $ | 8 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $50, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $51) | ||||||||||||
50 | 0.08%, 10/30/2009 | 50 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $56, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $57) | ||||||||||||
56 | 0.08%, 10/30/2009 | 56 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1, collateralized by U.S. Treasury Note 2.75%, 2013, value of $1) | ||||||||||||
1 | 0.05%, 10/30/2009 | 1 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $97, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $99) | ||||||||||||
97 | 0.07%, 10/30/2009 | 97 | ||||||||||
212 | ||||||||||||
Total short-term investments (cost $212) | $ | 212 | ||||||||||
Total investments (cost $47,644) ▲ | 99.5 | % | $ | 53,711 | ||||||||
Other assets and liabilities | 0.5 | % | 250 | |||||||||
Total net assets | 100.0 | % | $ | 53,961 | ||||||||
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 7.5% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $49,453 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 6,664 | ||
Unrealized Depreciation | (2,406 | ) | ||
Net Unrealized Appreciation | $ | 4,258 | ||
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
5
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 53,499 | $ | 53,499 | $ | — | $ | — | ||||||||
Short-Term Investments | 212 | — | 212 | — | ||||||||||||
Total | $ | 53,711 | $ | 53,499 | $ | 212 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. |
6
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $47,644) | $ | 53,711 | ||
Cash | — | |||
Foreign currency on deposit with custodian (cost $—) | — | |||
Receivables: | ||||
Investment securities sold | 798 | |||
Fund shares sold | 55 | |||
Dividends and interest | 61 | |||
Other assets | 26 | |||
Total assets | 54,651 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 617 | |||
Fund shares redeemed | 39 | |||
Investment management fees | 8 | |||
Distribution fees | 3 | |||
Accrued expenses | 23 | |||
Total liabilities | 690 | |||
Net assets | $ | 53,961 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 65,526 | |||
Accumulated undistributed net investment income | 41 | |||
Accumulated net realized loss on investments | (17,673 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 6,067 | |||
Net assets | $ | 53,961 | ||
Shares authorized | 300,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 9.08/$9.61 | ||
Shares outstanding | 3,075 | |||
Net assets | $ | 27,915 | ||
Class B: Net asset value per share | $ | 8.56 | ||
Shares outstanding | 461 | |||
Net assets | $ | 3,943 | ||
Class C: Net asset value per share | $ | 8.55 | ||
Shares outstanding | 948 | |||
Net assets | $ | 8,103 | ||
Class Y: Net asset value per share | $ | 9.41 | ||
Shares outstanding | 1,488 | |||
Net assets | $ | 14,000 | ||
7
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 735 | ||
Interest | 2 | |||
Securities lending | 11 | |||
Less: Foreign tax withheld | (2 | ) | ||
Total investment income | 746 | |||
Expenses: | ||||
Investment management fees | 405 | |||
Transfer agent fees | 130 | |||
Distribution fees | ||||
Class A | 58 | |||
Class B | 47 | |||
Class C | 74 | |||
Custodian fees | 9 | |||
Accounting services fees | 5 | |||
Registration and filing fees | 42 | |||
Board of Directors’ fees | 3 | |||
Audit fees | 7 | |||
Other expenses | 21 | |||
Total expenses (before waivers and fees paid indirectly) | 801 | |||
Expense waivers | (72 | ) | ||
Transfer agent fee waivers | (25 | ) | ||
Commission recapture | (1 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (98 | ) | ||
Total expenses, net | 703 | |||
Net Investment Income | 43 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (11,257 | ) | ||
Net Realized Loss on Investments | (11,257 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 18,932 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | — | |||
Net Changes in Unrealized Appreciation of Investments | 18,932 | |||
Net Gain on Investments | 7,675 | |||
Net Increase in Net Assets Resulting from Operations | $ | 7,718 | ||
8
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | 43 | $ | (195 | ) | |||
Net realized loss on investments | (11,257 | ) | (6,345 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 18,932 | (20,038 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 7,718 | (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 | (338 | ) | 4,220 | |||||
Class B | (2,948 | ) | (339 | ) | ||||
Class C | (1,358 | ) | 1,595 | |||||
Class Y | 1,496 | 11,577 | ||||||
Net increase (decrease) from capital share transactions | (3,148 | ) | 17,053 | |||||
Net Increase (Decrease) In Net Assets | 4,570 | (16,840 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 49,391 | 66,231 | ||||||
End of period | $ | 53,961 | $ | 49,391 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 41 | $ | — | ||||
9
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
10
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable representation of exit price. |
11
Notes to Financial Statements – (continued)
October 31, 2009
(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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. |
c) | Foreign Currency Transactions – Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 October 31, 2009. |
12
g) | Forward Foreign Currency Contracts – The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had no outstanding forward foreign currency contracts as of October 31, 2009. | |||
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 annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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) | 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 RIC 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 intends to distribute substantially all of its income and capital 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. |
13
Notes to Financial Statements – (continued)
October 31, 2009
b) | Net Investment Income (Loss), Realized Gains and (Losses) – Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings – 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, 2009 | 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, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 42 | ||
Accumulated Capital Losses * | (15,864 | ) | ||
Unrealized Appreciation † | 4,257 | |||
Total Accumulated Deficit | $ | (11,565 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts – The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $2 and increase accumulated net realized gain on investments by $2. | ||
e) | Capital Loss Carryforward – At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 4,938 | ||
2017 | 10,926 | |||
Total | $ | 15,864 | ||
14
f) | Accounting for Uncertainty in Income Taxes – Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 monthly compensation on the Fund’s average net assets. The Fund’s accounting services fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
All Asset Levels | 0.01 | % |
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 year ended October 31, 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 | % |
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 a non-interest-bearing custody account. For the year ended October 31, 2009, these amounts are included in the Statement of Operations. |
15
Notes to Financial Statements – (continued)
October 31, 2009
(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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.39 | % | 1.45 | % | 1.47 | % | 1.48 | % | 1.57 | % | ||||||||||
Class B Shares | 1.95 | 2.18 | 2.22 | 2.23 | 2.32 | |||||||||||||||
Class C Shares | 2.17 | 2.20 | 2.20 | 2.23 | 2.32 | |||||||||||||||
Class Y Shares | 1.03 | 0.96 | 1.02 | 1.05 | 1.13 |
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $26 and contingent deferred sales charges of $6 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $110 for providing such services. These fees are accrued daily and paid monthly. |
16
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 | 0.28 | % | 26.24 | % | ||||
Class B | 0.29 | 25.34 | ||||||
Class C | 0.29 | 25.32 | ||||||
Class Y | 0.28 | 26.83 |
5. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 52,872 | ||
Sales Proceeds Excluding U.S. Government Obligations | 54,583 |
6. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 839 | — | (933 | ) | — | (94 | ) | 755 | 357 | (799 | ) | — | 313 | |||||||||||||||||||||||||||
Amount | $ | 6,509 | $ | — | $ | (6,847 | ) | $ | — | $ | (338 | ) | $ | 8,345 | $ | 4,174 | $ | (8,299 | ) | $ | — | $ | 4,220 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 62 | — | (472 | ) | — | (410 | ) | 77 | 118 | (243 | ) | — | (48 | ) | ||||||||||||||||||||||||||
Amount | $ | 437 | $ | — | $ | (3,385 | ) | �� | $ | — | $ | (2,948 | ) | $ | 819 | $ | 1,320 | $ | (2,478 | ) | $ | — | $ | (339 | ) | |||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 159 | — | (363 | ) | — | (204 | ) | 210 | 126 | (206 | ) | — | 130 | |||||||||||||||||||||||||||
Amount | $ | 1,136 | $ | — | $ | (2,494 | ) | $ | — | $ | (1,358 | ) | $ | 2,279 | $ | 1,405 | $ | (2,089 | ) | $ | — | $ | 1,595 | |||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 937 | — | (840 | ) | — | 97 | 1,387 | 4 | (27 | ) | — | 1,364 | ||||||||||||||||||||||||||||
Amount | $ | 6,973 | $ | — | $ | (5,477 | ) | $ | — | $ | 1,496 | $ | 11,816 | $ | 41 | $ | (280 | ) | $ | — | $ | 11,577 |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 213 | $ | 1,666 | |||||
For the Year Ended October 31, 2008 | 5 | $ | 58 |
17
Notes to Financial Statements – (continued)
October 31, 2009
(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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. | ||
9. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
18
19
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.57 | $ | 0.01 | $ | — | $ | 1.50 | $ | 1.51 | $ | — | $ | — | $ | — | $ | — | $ | 1.51 | $ | 9.08 | ||||||||||||||||||||||
B | 7.18 | (0.03 | ) | — | 1.41 | 1.38 | — | — | — | — | 1.38 | 8.56 | ||||||||||||||||||||||||||||||||
C | 7.18 | (0.05 | ) | — | 1.42 | 1.37 | — | — | — | — | 1.37 | 8.55 | ||||||||||||||||||||||||||||||||
Y | 7.82 | 0.05 | — | 1.54 | 1.59 | — | — | — | — | 1.59 | 9.41 | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 13.95 | (0.01 | ) | — | (4.85 | ) | (4.86 | ) | — | (1.52 | ) | — | (1.52 | ) | (6.38 | ) | 7.57 | |||||||||||||||||||||||||||
B | 13.40 | (0.09 | ) | — | (4.61 | ) | (4.70 | ) | — | (1.52 | ) | — | (1.52 | ) | (6.22 | ) | 7.18 | |||||||||||||||||||||||||||
C | 13.41 | (0.09 | ) | — | (4.62 | ) | (4.71 | ) | — | (1.52 | ) | — | (1.52 | ) | (6.23 | ) | 7.18 | |||||||||||||||||||||||||||
Y | 14.27 | — | — | (4.93 | ) | (4.93 | ) | — | (1.52 | ) | — | (1.52 | ) | (6.45 | ) | 7.82 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 11.02 | (0.04 | ) | 0.04 | 2.93 | 2.93 | — | — | — | — | 2.93 | 13.95 | ||||||||||||||||||||||||||||||||
B | 10.66 | (0.14 | ) | 0.04 | 2.84 | 2.74 | — | — | — | — | 2.74 | 13.40 | ||||||||||||||||||||||||||||||||
C | 10.67 | (0.13 | ) | 0.04 | 2.83 | 2.74 | — | — | — | — | 2.74 | 13.41 | ||||||||||||||||||||||||||||||||
Y | 11.22 | 0.02 | 0.04 | 2.99 | 3.05 | — | — | — | — | 3.05 | 14.27 | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.26 | 0.02 | — | 0.81 | 0.83 | (0.07 | ) | — | — | (0.07 | ) | 0.76 | 11.02 | |||||||||||||||||||||||||||||||
B | 9.94 | (0.06 | ) | — | 0.78 | 0.72 | — | — | — | — | 0.72 | 10.66 | ||||||||||||||||||||||||||||||||
C | 9.94 | (0.07 | ) | — | 0.80 | 0.73 | — | — | — | — | 0.73 | 10.67 | ||||||||||||||||||||||||||||||||
Y | 10.44 | 0.04 | — | 0.85 | 0.89 | (0.11 | ) | — | — | (0.11 | ) | 0.78 | 11.22 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 9.14 | 0.08 | — | 1.04 | 1.12 | — | — | — | — | 1.12 | 10.26 | |||||||||||||||||||||||||||||||||
B | 8.92 | (0.01 | ) | — | 1.03 | 1.02 | — | — | — | — | 1.02 | 9.94 | ||||||||||||||||||||||||||||||||
C | 8.92 | (0.01 | ) | — | 1.03 | 1.02 | — | — | — | — | 1.02 | 9.94 | ||||||||||||||||||||||||||||||||
Y | 9.28 | 0.13 | — | 1.06 | 1.19 | (0.03 | ) | — | — | (0.03 | ) | 1.16 | 10.44 |
(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) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. |
20
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||
19.95% | $ | 27,915 | 1.63 | % | 1.40 | % | 1.40 | % | 0.15 | % | 113 | % | ||||||||||||
19.22 | 3,943 | 2.58 | 1.95 | 1.95 | (0.33 | ) | — | |||||||||||||||||
19.08 | 8,103 | 2.36 | 2.17 | 2.17 | (0.61 | ) | — | |||||||||||||||||
20.34 | 14,000 | 1.04 | 1.04 | 1.04 | 0.56 | — | ||||||||||||||||||
(38.66) | 23,989 | 1.48 | 1.45 | 1.45 | (0.06 | ) | 110 | |||||||||||||||||
(39.11) | 6,254 | 2.30 | 2.19 | 2.19 | (0.80 | ) | — | |||||||||||||||||
(39.16) | 8,276 | 2.21 | 2.20 | 2.20 | (0.81 | ) | — | |||||||||||||||||
(38.24) | 10,872 | 0.96 | 0.96 | 0.96 | 0.36 | — | ||||||||||||||||||
26.59 (e) | 39,831 | 1.50 | 1.47 | 1.47 | (0.30 | ) | 159 | |||||||||||||||||
25.70 (e) | 12,307 | 2.30 | 2.22 | 2.22 | (1.04 | ) | — | |||||||||||||||||
25.68 (e) | 13,703 | 2.22 | 2.20 | 2.20 | (1.04 | ) | — | |||||||||||||||||
27.18 (e) | 390 | 1.02 | 1.02 | 1.02 | 0.17 | — | ||||||||||||||||||
8.07 | 40,215 | 1.68 | 1.50 | 1.50 | 0.14 | 123 | ||||||||||||||||||
7.24 | 13,162 | 2.47 | 2.25 | 2.25 | (0.61 | ) | — | |||||||||||||||||
7.34 | 13,065 | 2.39 | 2.25 | 2.25 | (0.61 | ) | — | |||||||||||||||||
8.57 | 487 | 1.18 | 1.07 | 1.07 | 0.56 | — | ||||||||||||||||||
12.31 | 50,067 | 1.65 | 1.60 | 1.60 | 0.68 | 112 | ||||||||||||||||||
11.44 | 15,156 | 2.45 | 2.35 | 2.35 | (0.09 | ) | — | |||||||||||||||||
11.44 | 16,737 | 2.36 | 2.35 | 2.35 | (0.05 | ) | — | |||||||||||||||||
12.86 | 473 | 1.16 | 1.16 | 1.16 | 1.27 | — |
21
The Hartford Mutual Funds, Inc.
December 15, 2009
22
23
Directors and Officers (Unaudited) – (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
24
25
26
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,225.40 | $ | 8.08 | $ | 1,000.00 | $ | 1,017.95 | $ | 7.32 | 1.44 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,222.90 | $ | 10.98 | $ | 1,000.00 | $ | 1,015.32 | $ | 9.96 | 1.96 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,221.40 | $ | 12.37 | $ | 1,000.00 | $ | 1,014.06 | $ | 11.22 | 2.21 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,228.50 | $ | 5.79 | $ | 1,000.00 | $ | 1,020.01 | $ | 5.24 | 1.03 | 184 | 365 |
27
28
29
30
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
11 | ||||
12 | ||||
13 | ||||
14 | ||||
15 | ||||
26 | ||||
28 | ||||
29 | ||||
31 | ||||
31 | ||||
32 | ||||
33 | ||||
34 |
The Hartford Global Enhanced Dividend Fund inception 11/28/2007 | ||
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks a high level of current income. Capital appreciation is a secondary objective. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
Global Enhanced Dividend A# | 7.90 | % | -15.11 | % | ||||
Global Enhanced Dividend A## | 1.96 | % | -17.57 | % | ||||
Global Enhanced Dividend B# | 7.12 | % | -15.75 | % | ||||
Global Enhanced Dividend B## | 2.12 | % | -17.32 | % | ||||
Global Enhanced Dividend C# | 7.12 | % | -15.75 | % | ||||
Global Enhanced Dividend C## | 6.12 | % | -15.75 | % | ||||
Global Enhanced Dividend I# | 8.33 | % | -14.85 | % | ||||
Global Enhanced Dividend R3# | 7.42 | % | -15.46 | % | ||||
Global Enhanced Dividend R4# | 7.74 | % | -15.23 | % | ||||
Global Enhanced Dividend R5# | 8.22 | % | -14.93 | % | ||||
Global Enhanced Dividend Y# | 8.33 | % | -14.85 | % | ||||
MSCI World Value Index | 18.54 | % | -15.43 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Paul Bukowski
Vice President
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 2.4 | % | ||
Banks (Financials) | 13.4 | |||
Basic Materials (Materials) | 0.6 | |||
Capital Goods (Industrials) | 10.8 | |||
Commercial & Professional Services (Industrials) | 2.5 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 2.6 | |||
Consumer Services (Consumer Discretionary) | 2.3 | |||
Diversified Financials (Financials) | 6.8 | |||
Energy (Energy) | 20.4 | |||
Food & Staples Retailing (Consumer Staples) | 1.0 | |||
Food, Beverage & Tobacco (Consumer Staples) | 6.6 | |||
Health Care Equipment & Services (Health Care) | 2.3 | |||
Household & Personal Products (Consumer Staples) | 0.9 | |||
Insurance (Financials) | 6.2 | |||
Materials (Materials) | 7.4 | |||
Media (Consumer Discretionary) | 1.8 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 7.5 | |||
Real Estate (Financials) | 5.1 | |||
Retailing (Consumer Discretionary) | 2.5 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 3.1 | |||
Software & Services (Information Technology) | 2.6 | |||
Technology Hardware & Equipment (Information Technology) | 5.6 | |||
Telecommunication Services (Services) | 10.7 | |||
Transportation (Industrials) | 1.5 | |||
Utilities (Utilities) | 8.7 | |||
Short-Term Investments | 1.5 | |||
Total Long Positions | 136.8 | |||
Short Positions | (36.9 | ) | ||
Other Assets and Liabilities | 0.1 | |||
Total | 100.0 | % | ||
3
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 0.3 | % | ||
Banks (Financials) | 0.2 | |||
Capital Goods (Industrials) | 3.1 | |||
Commercial & Professional Services (Industrials) | 0.9 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 1.0 | |||
Consumer Services (Consumer Discretionary) | 1.4 | |||
Consumer Staples (Industrials) | 0.3 | |||
Diversified Financials (Financials) | 0.2 | |||
Energy (Energy) | 4.9 | |||
Food & Staples Retailing (Consumer Staples) | 0.5 | |||
Food, Beverage & Tobacco (Consumer Staples) | 1.9 | |||
Health Care Equipment & Services (Health Care) | 0.3 | |||
Household & Personal Products (Consumer Staples) | 0.1 | |||
Insurance (Financials) | 0.2 | |||
Materials (Materials) | 2.8 | |||
Media (Consumer Discretionary) | 1.5 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 2.1 | |||
Real Estate (Financials) | 0.2 | |||
Retailing (Consumer Discretionary) | 1.5 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 1.9 | |||
Services (Consumer Discretionary) | 0.1 | |||
Software & Services (Information Technology) | 2.1 | |||
Technology Hardware & Equipment (Information Technology) | 2.8 | |||
Telecommunication Services (Services) | 3.9 | |||
Transportation (Industrials) | 0.3 | |||
Utilities (Utilities) | 2.4 | |||
Total | 36.9 | % | ||
as of October 31, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 2.3 | % | ||
Canada | 6.9 | |||
Chile | 1.7 | |||
China | 0.6 | |||
Finland | 0.8 | |||
France | 6.0 | |||
Germany | 1.6 | |||
Greece | 0.5 | |||
Hong Kong | 0.9 | |||
India | 0.7 | |||
Indonesia | 0.2 | |||
Israel | 0.2 | |||
Italy | 0.9 | |||
Japan | 9.4 | |||
Luxembourg | 0.6 | |||
Mexico | 0.9 | |||
Netherlands | 1.5 | |||
New Zealand | 0.5 | |||
Norway | 0.1 | |||
Philippines | 0.4 | |||
Portugal | 0.2 | |||
South Korea | 0.7 | |||
Spain | 0.7 | |||
Switzerland | 0.9 | |||
Taiwan | 1.3 | |||
United Kingdom | 11.2 | |||
United States | 83.6 | |||
Short-Term Investments | 1.5 | |||
Total Long Positions | 136.8 | |||
Short Positions | (36.9 | ) | ||
Other Assets and Liabilities | 0.1 | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
Country | Net Assets | |||
Canada | 1.1 | % | ||
India | 0.5 | |||
Ireland | 0.4 | |||
Japan | 0.1 | |||
Mexico | 0.5 | |||
Russia | 0.2 | |||
United States | 34.1 | |||
Total | 36.9 | % | ||
4
Schedule of Investments
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
LONG POSITIONS - 136.8% | ||||||||
COMMON STOCKS - 135.3% | ||||||||
Automobiles & Components - 2.4% | ||||||||
2 | Honda Motor Co., Ltd. ADR ‡ | $ | 65 | |||||
4 | Nissan Motor Co., Ltd. ADR •‡ | 60 | ||||||
1 | Thor Industries, Inc. ‡ | 15 | ||||||
— | Toyota Motor Corp ADR ‡ | 38 | ||||||
178 | ||||||||
Banks - 13.4% | ||||||||
1 | Banco Bilboa Vizcaya — SP ADR ‡ | 25 | ||||||
1 | Banco de Chile ADR ‡ | 47 | ||||||
— | Banco Santander Chili S.A. ADR ‡ | 25 | ||||||
2 | Banco Santander S.A. ADR ‡ | 30 | ||||||
— | Bank of Hawaii Corp. ‡ | 15 | ||||||
1 | Bank of Montreal ‡ | 43 | ||||||
1 | BB&T Corp. | 31 | ||||||
1 | Canadian Imperial Bank of Commerce ‡ | 32 | ||||||
— | Cullen/Frost Bankers, Inc. ‡ | 5 | ||||||
1 | First Niagara Financial Group, Inc. ‡ | 10 | ||||||
— | FirstMerit Corp. ‡ | 8 | ||||||
2 | FNB Corp. ‡ | 18 | ||||||
— | Hancock Holding Co. ‡ | 6 | ||||||
1 | HSBC Holdings plc ADR ‡ | 54 | ||||||
1 | Hudson City Bancorp, Inc. ‡ | 9 | ||||||
— | Iberiabank Corp. ‡ | 5 | ||||||
40 | Mitsubishi UFJ Financial Group, Inc. ADR ‡ | 212 | ||||||
8 | Mizuho Financial Group, Inc. ADR ‡ | 30 | ||||||
2 | National Bank of Greece S.A. ADR ‡ | 17 | ||||||
1 | Royal Bank of Canada ‡ | 67 | ||||||
— | Shinhan Financial Group Co., Ltd. ADR ‡ | 14 | ||||||
1 | Sterling Bancshares, Inc. ‡ | 4 | ||||||
— | SunTrust Banks, Inc. ‡ | 4 | ||||||
1 | Toronto-Dominion Bank ADR ‡ | 77 | ||||||
— | Trustmark Corp. ‡ | 6 | ||||||
3 | US Bancorp ‡ | 61 | ||||||
1 | Wells Fargo & Co. ‡ | 25 | ||||||
1 | Westpac Banking Corp. ADR ‡ | 97 | ||||||
977 | ||||||||
Basic Materials - 0.6% | ||||||||
2 | RPM International, Inc. ‡ | 42 | ||||||
Capital Goods - 10.8% | ||||||||
1 | 3M Co. ‡ | 98 | ||||||
1 | ABB Ltd. ADR ‡ | 22 | ||||||
4 | Aircastle Ltd. ‡ | 28 | ||||||
1 | Boeing Co. ‡ | 45 | ||||||
1 | Caterpillar, Inc. ‡ | 70 | ||||||
— | Crane Co. ‡ | 9 | ||||||
1 | Eaton Corp. ‡ | 41 | ||||||
1 | Emerson Electric Co. ‡ | 56 | ||||||
2 | General Electric Co. ‡ | 26 | ||||||
— | Honeywell International, Inc. ‡ | 17 | ||||||
1 | Hubbell, Inc. Class B ‡ | 25 | ||||||
— | Illinois Tool Works, Inc. ‡ | 8 | ||||||
1 | Ingersoll-Rand plc ‡ | 28 | ||||||
3 | Insteel Industries, Inc. ‡ | 30 | ||||||
3 | Masco Corp. ‡ | 33 | ||||||
— | Northrop Grumman Corp. ‡ | 19 | ||||||
1 | Oshkosh Corp. ‡ | 39 | ||||||
1 | Rockwell Automation, Inc. ‡ | 46 | ||||||
1 | Siemens AG ADR ‡ | 54 | ||||||
— | Stanley Works ‡ | 16 | ||||||
7 | Tomkins plc ADR ‡ | 71 | ||||||
781 | ||||||||
Commercial & Professional Services - 2.5% | ||||||||
1 | Avery Dennison Corp. ‡ | 30 | ||||||
1 | Corporate Executive Board Co. ‡ | 29 | ||||||
2 | Pitney Bowes, Inc. ‡ | 40 | ||||||
2 | R.R. Donnelley & Sons Co. ‡ | 37 | ||||||
2 | Steelcase, Inc. ‡ | 12 | ||||||
1 | Waste Management, Inc. ‡ | 31 | ||||||
179 | ||||||||
Consumer Durables & Apparel - 2.6% | ||||||||
4 | Jones Apparel Group, Inc. ‡ | 70 | ||||||
— | National Presto Industries, Inc. ‡ | 8 | ||||||
1 | Panasonic Corp. ‡ | 17 | ||||||
— | Polaris Industries, Inc. ‡ | 10 | ||||||
1 | Sony Corp. ADR ‡ | 37 | ||||||
1 | Tupperware Brands Corp. ‡ | 28 | ||||||
— | V.F. Corp. ‡ | 23 | ||||||
193 | ||||||||
Consumer Services - 2.3% | ||||||||
2 | McDonald’s Corp. ‡ | 143 | ||||||
1 | Starwood Hotels & Resorts ‡ | 24 | ||||||
167 | ||||||||
Diversified Financials - 6.8% | ||||||||
1 | American Express Co. ‡ | 19 | ||||||
— | Ameriprise Financial, Inc. ‡ | 16 | ||||||
2 | Apollo Investment Corp. ‡ | 17 | ||||||
2 | Bank of America Corp. ‡ | 35 | ||||||
1 | Bank of New York Mellon Corp. ‡ | 16 | ||||||
— | BlackRock, Inc. ‡ | 56 | ||||||
— | Credit Suisse Group ADR ‡ | 17 | ||||||
— | Eaton Vance Corp. ‡ | 13 | ||||||
— | Franklin Resources, Inc. ‡ | 10 | ||||||
1 | JP Morgan Chase & Co. ‡ | 40 | ||||||
2 | Morgan Stanley ‡ | 58 | ||||||
2 | NYSE Euronext ‡ | 58 | ||||||
2 | Orix Corp. ADR ‡ | 71 | ||||||
1 | Prospect Capital Corp. ‡ | 6 | ||||||
2 | SEI Investments Co. ‡ | 27 | ||||||
1 | Waddell and Reed Financial, Inc. Class A ‡ | 39 | ||||||
498 | ||||||||
Energy - 20.4% | ||||||||
4 | BP plc ADR ‡ | 246 | ||||||
1 | Chevron Corp. ‡ | 77 | ||||||
— | CNOOC Ltd. ADR ‡ | 63 | ||||||
1 | ConocoPhillips Holding Co. ‡ | 29 | ||||||
3 | DHT Maritime, Inc. ‡ | 12 | ||||||
— | Diamond Offshore Drilling, Inc. ‡ | 37 | ||||||
— | EnCana Corp. ADR ‡ | 20 | ||||||
3 | Enerplus Resources Fund ‡ | 69 | ||||||
1 | Eni S.p.A. ADR ‡ | 65 | ||||||
1 | Exxon Mobil Corp. ‡ | 78 | ||||||
— | Frontline Ltd. ‡ | 7 | ||||||
3 | General Maritime Corp. ‡ | 22 | ||||||
— | Knightsbridge Tankers Ltd. ADR ‡ | 4 | ||||||
2 | Marathon Oil Corp. ‡ | 61 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
LONG POSITIONS - 136.8% - (continued) | ||||||||
COMMON STOCKS - 135.3% - (continued) | ||||||||
Energy - 20.4% - (continued) | ||||||||
1 | Overseas Shipholding Group, Inc. ‡ | $ | 33 | |||||
1 | Patterson-UTI Energy, Inc. ‡ | 17 | ||||||
2 | Pengrowth Energy Trust ‡ | 17 | ||||||
— | PetroChina Co., Ltd. ADR ‡ | 42 | ||||||
6 | Precision Drilling Trust ‡ | 36 | ||||||
2 | Royal Dutch Shell plc ADR ‡ | 137 | ||||||
4 | Ship Finance International Ltd. ‡ | 47 | ||||||
2 | Spectra Energy Corp. ‡ | 40 | ||||||
2 | Sunoco, Inc. ‡ | 64 | ||||||
4 | Total S.A. ADR ‡ | 232 | ||||||
1 | Williams Cos., Inc. ‡ | 21 | ||||||
2 | WSP Holdings Ltd. ‡ | 10 | ||||||
1,486 | ||||||||
Food & Staples Retailing - 1.0% | ||||||||
2 | Supervalu, Inc. ‡ | 39 | ||||||
1 | Sysco Corp. ‡ | 33 | ||||||
72 | ||||||||
Food, Beverage & Tobacco - 6.6% | ||||||||
1 | Coca-Cola Co. ‡ | 53 | ||||||
1 | H.J. Heinz Co. ‡ | 28 | ||||||
1 | Kraft Foods, Inc. ‡ | 32 | ||||||
1 | Lorillard, Inc. ‡ | 48 | ||||||
— | PepsiCo, Inc. ‡ | 17 | ||||||
2 | Philip Morris International, Inc. ‡ | 84 | ||||||
2 | Reynolds American, Inc. ‡ | 81 | ||||||
3 | Unilever N.V. NY Shares ADR ‡ | 106 | ||||||
1 | Universal Corp. ‡ | 26 | ||||||
475 | ||||||||
Health Care Equipment & Services - 2.3% | ||||||||
— | Becton, Dickinson & Co. | 23 | ||||||
5 | Brookdale Senior Living, Inc. ‡ | 85 | ||||||
1 | Computer Programs and Systems, Inc. ‡ | 23 | ||||||
— | Fresenius Medical Care AG ADR ‡ | 13 | ||||||
— | Landauer, Inc. ‡ | 6 | ||||||
— | Teleflex, Inc. ‡ | 17 | ||||||
167 | ||||||||
Household & Personal Products - 0.9% | ||||||||
— | Clorox Co. ‡ | 16 | ||||||
1 | Kimberly-Clark Corp. | 48 | ||||||
64 | ||||||||
Insurance - 6.2% | ||||||||
1 | Aflac, Inc. ‡ | 35 | ||||||
2 | Allstate Corp. ‡ | 44 | ||||||
1 | Arthur J. Gallagher & Co. ‡ | 27 | ||||||
3 | Axa ADR ‡ | 67 | ||||||
— | Axis Capital Holdings Ltd. ‡ | 10 | ||||||
1 | Brown & Brown, Inc. ‡ | 16 | ||||||
1 | Chubb Corp. ‡ | 34 | ||||||
2 | Fidelity National Financial, Inc. ‡ | 32 | ||||||
2 | Manualife Financial Corp. ‡ | 31 | ||||||
3 | Old Republic International Corp. ‡ | 37 | ||||||
3 | Prudential Financial, Inc. ‡ | 53 | ||||||
1 | Sun Life Financial ‡ | 27 | ||||||
— | Travelers Cos., Inc. ‡ | 15 | ||||||
1 | Unitrin, Inc. ‡ | 27 | ||||||
455 | ||||||||
Materials - 7.4% | ||||||||
1 | ArcelorMittal ADR ‡ | 41 | ||||||
1 | BHP Billiton Ltd. ADR ‡ | 76 | ||||||
1 | Cemex S.A. de C.V. ADR •‡ | 10 | ||||||
1 | Compass Minerals Group, Inc. ‡ | 42 | ||||||
5 | Dow Chemical Co. ‡ | 116 | ||||||
2 | E.I. DuPont de Nemours & Co. ‡ | 52 | ||||||
— | Lubrizol Corp. ‡ | 30 | ||||||
1 | MeadWestvaco Corp. ‡ | 20 | ||||||
— | Nucor Corp. ‡ | 18 | ||||||
1 | Olin Corp. ‡ | 19 | ||||||
2 | Southern Copper Corp. ‡ | 62 | ||||||
1 | Syngenta AG ADR ‡ | 31 | ||||||
— | Weyerhaeuser Co. ‡ | 12 | ||||||
1 | Worthington Industries, Inc. ‡ | 16 | ||||||
545 | ||||||||
Media - 1.8% | ||||||||
1 | A.H. Belo Corp. Class A ‡ | 6 | ||||||
1 | CBS Corp. Class B ‡ | 17 | ||||||
1 | McGraw-Hill Cos., Inc. ‡ | 16 | ||||||
— | Meredith Corp. ‡ | 10 | ||||||
1 | Sham Communications, Inc. ‡ | 24 | ||||||
2 | Time Warner, Inc. ‡ | 59 | ||||||
132 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 7.5% | ||||||||
1 | Abbott Laboratories ‡ | 37 | ||||||
2 | AstraZeneca plc ADR ‡ | 99 | ||||||
5 | Biovail Corp. ‡ | 62 | ||||||
4 | Bristol-Myers Squibb Co. ‡ | 86 | ||||||
4 | Eli Lilly & Co. ‡ | 131 | ||||||
— | Johnson & Johnson ‡ | 25 | ||||||
3 | Sanofi-Aventis S.A. ADR ‡ | 108 | ||||||
548 | ||||||||
Real Estate - 5.1% | ||||||||
2 | Annaly Capital Management, Inc. ‡ | 35 | ||||||
2 | Anworth Mortgage Asset Corp. ‡ | 14 | ||||||
3 | Apartment Investment & Management Co. ‡ | 37 | ||||||
1 | Brookfield Properties Corp. ‡ | 7 | ||||||
1 | Capstead Mortgage Corp. ‡ | 7 | ||||||
2 | Duke Realty, Inc. ‡ | 18 | ||||||
— | Entertainment Properties Trust ‡ | 8 | ||||||
— | HCP, Inc. ‡ | 8 | ||||||
— | Health Care, Inc. ‡ | 16 | ||||||
1 | Hospitality Properties Trust ‡ | 23 | ||||||
5 | HRPT Properties Trust ‡ | 36 | ||||||
— | Inland Real Estate Corp. ‡ | 3 | ||||||
2 | Medical Properties Trust, Inc. ‡ | 16 | ||||||
1 | MFA Mortgage Investments, Inc. ‡ | 9 | ||||||
1 | Nationwide Health Properties, Inc. ‡ | 40 | ||||||
3 | Northstar Realty Finance Corp. ‡ | 10 | ||||||
3 | Resource Capital Corp. ‡ | 13 | ||||||
5 | UDR, Inc. ‡ | 71 | ||||||
371 | ||||||||
Retailing - 2.5% | ||||||||
1 | Asbury Automotive Group •‡ | 11 | ||||||
— | Barnes & Noble, Inc. ‡ | 5 | ||||||
2 | Foot Locker, Inc. ‡ | 16 |
6
Shares or Principal Amount | Market Value ╪ | |||||||||||
LONG POSITIONS - 136.8% - (continued) | ||||||||||||
COMMON STOCKS - 135.3% - (continued) | ||||||||||||
Retailing - - 2.5% - (continued) | ||||||||||||
— | Genuine Parts Co. ‡ | $ | 15 | |||||||||
— | Home Depot, Inc. ‡ | 7 | ||||||||||
— | J.C. Penney Co., Inc. ‡ | 10 | ||||||||||
1 | Limited Brands, Inc. ‡ | 24 | ||||||||||
1 | Macy’s, Inc. ‡ | 22 | ||||||||||
3 | OfficeMax, Inc. ‡ | 38 | ||||||||||
1 | The Buckle, Inc. ‡ | 22 | ||||||||||
1 | Williams-Sonoma, Inc. ‡ | 15 | ||||||||||
185 | ||||||||||||
Semiconductors & Semiconductor Equipment - 3.1% | ||||||||||||
1 | Analog Devices, Inc. ‡ | 17 | ||||||||||
8 | Himax Techologies, Inc. ADR ‡ | 21 | ||||||||||
2 | Intel Corp. ‡ | 46 | ||||||||||
2 | Intersil Corp. ‡ | 30 | ||||||||||
1 | Linear Technology Corp. ‡ | 14 | ||||||||||
1 | Microchip Technology, Inc. ‡ | 30 | ||||||||||
7 | Taiwan Semiconductor Manufacturing Co., Ltd. ADR ‡ | 71 | ||||||||||
229 | ||||||||||||
Software & Services - 2.6% | ||||||||||||
— | Automatic Data Processing, Inc. ‡ | 16 | ||||||||||
2 | infoGROUP, Inc. ‡ | 11 | ||||||||||
1 | Infosys Technologies Ltd. ADR ‡ | 48 | ||||||||||
13 | iPass, Inc. ‡ | 17 | ||||||||||
2 | Paychex, Inc. ‡ | 63 | ||||||||||
1 | S.p.A. ADR ‡ | 39 | ||||||||||
194 | ||||||||||||
Technology Hardware & Equipment - 5.6% | ||||||||||||
3 | Canon, Inc. ADR ‡ | 127 | ||||||||||
1 | Fujifilm Holdings Corp. ‡ | 18 | ||||||||||
— | Hitachi Ltd. ‡ | 15 | ||||||||||
2 | Jabil Circuit, Inc. ‡ | 32 | ||||||||||
1 | Molex, Inc. ‡ | 21 | ||||||||||
4 | Nokia Corp. ‡ | 55 | ||||||||||
10 | Seagate Technology ‡ | 141 | ||||||||||
409 | ||||||||||||
Telecommunication Services - 10.7% | ||||||||||||
2 | Alaska Communication Systems Holdings, Inc. ‡ | 15 | ||||||||||
5 | AT&T, Inc. ‡ | 121 | ||||||||||
3 | CenturyTel, Inc. ‡ | 96 | ||||||||||
2 | Deutsche Telekom AG ADR ‡ | 25 | ||||||||||
1 | France Telecom S.A. ADR ‡ | 30 | ||||||||||
7 | Frontier Communications Corp. ‡ | 47 | ||||||||||
2 | Hellenic Telecommunications Organization S.A. ADR ‡ | 20 | ||||||||||
1 | Hutchison Telecom International Ltd. ADR ‡ | 4 | ||||||||||
1 | Hutchison Telecommunications ADR ‡ | 4 | ||||||||||
— | P.T. Telekomunikasi Indonesia ADR ‡ | 14 | ||||||||||
1 | Partner Communications Co., Ltd. ADR ‡ | 13 | ||||||||||
1 | Philippine Long Distance Telephone Co. ADR ‡ | 27 | ||||||||||
1 | Portugal Telecom S.A. ADR ‡ | 14 | ||||||||||
9 | Qwest Communications International, Inc. ‡ | 31 | ||||||||||
2 | SK Telecom Co., Ltd. ADR ‡ | 36 | ||||||||||
4 | Telecom Corp. of New Zealand Ltd. ADR ‡ | 35 | ||||||||||
2 | Telefonos de Mexico S.A. ADR Class L ‡ | 26 | ||||||||||
2 | Verizon Communications, Inc. ‡ | �� | 71 | |||||||||
6 | Vodafone Group plc ADR ‡ | 137 | ||||||||||
2 | Windstream Corp. ‡ | 16 | ||||||||||
782 | ||||||||||||
Transportation - 1.5% | ||||||||||||
2 | Eagle Bulk Shipping, Inc. ‡ | 7 | ||||||||||
1 | Genco Shipping & Trading Ltd. ‡ | 27 | ||||||||||
1 | Grupo Aeroportuario del Pacifico SAB de CV ADR ‡ | 29 | ||||||||||
3 | Lan Airlines S.A. ADR ‡ | 41 | ||||||||||
104 | ||||||||||||
Utilities - 8.7% | ||||||||||||
1 | AGL Resources, Inc. ‡ | 35 | ||||||||||
1 | Allete, Inc. ‡ | 26 | ||||||||||
2 | Ameren Corp. ‡ | 37 | ||||||||||
1 | American Electric Power Co., Inc. ‡ | 31 | ||||||||||
3 | CenterPoint Energy, Inc. ‡ | 37 | ||||||||||
— | CIA Saneamento Basico De Estado de Sao Paulo ‡ | 10 | ||||||||||
1 | Consolidated Edison, Inc. ‡ | 49 | ||||||||||
1 | DTE Energy Co. ‡ | 36 | ||||||||||
— | National Grid plc ‡ | 13 | ||||||||||
1 | OGE Energy Corp. ‡ | 43 | ||||||||||
1 | Oneok, Inc. ‡ | 19 | ||||||||||
2 | Pepco Holdings, Inc. ‡ | 27 | ||||||||||
2 | Pinnacle West Capital Corp. ‡ | 65 | ||||||||||
1 | Progress Energy, Inc. ‡ | 46 | ||||||||||
1 | SCANA Corp. ‡ | 30 | ||||||||||
3 | Southern Co. ‡ | 92 | ||||||||||
2 | TECO Energy, Inc. ‡ | 24 | ||||||||||
1 | Vectren Corp. ‡ | 22 | ||||||||||
642 | ||||||||||||
Total common stocks (cost $10,217) | $ | 9,875 | ||||||||||
Total long-term investments (cost $10,217) | $ | 9,875 | ||||||||||
SHORT-TERM INVESTMENTS - 1.5% | ||||||||||||
Investment Pools and Funds - 1.5% | ||||||||||||
107 | State Street Bank U.S. Government Money Market Fund | $ | 107 | |||||||||
Total short-term investments (cost $107) | $ | 107 | ||||||||||
Total long positions (cost $10,324) ▲ | 136.8 | % | $ | 9,982 | ||||||||
Securities sold short (proceeds $2,578) ▲ | (36.9 | )% | (2,689 | ) | ||||||||
Other assets and liabilities | 0.1 | % | 1 | |||||||||
Total net assets | 100.0 | % | $ | 7,294 | ||||||||
7
Schedule of Investments
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
SECURITIES SOLD SHORT - 36.9% | ||||||||
COMMON STOCK - 36.9% | ||||||||
Automobiles & Components - 0.3% | ||||||||
1 | Dana Holding Corp.• | $ | 8 | |||||
1 | Tenneco Automotive, Inc.• | 16 | ||||||
24 | ||||||||
Banks - 0.2% | ||||||||
1 | Signature Bank• | 17 | ||||||
Capital Goods - 3.1% | ||||||||
— | Astec Industries, Inc.• | 5 | ||||||
1 | BE Aerospace, Inc.• | 18 | ||||||
— | Ceradyne, Inc.• | 6 | ||||||
1 | Colfax Corp.• | 7 | ||||||
— | Enpro Industries, Inc.• | 8 | ||||||
— | ESCO Technologies, Inc.• | 13 | ||||||
1 | Flow International Corp.• | 3 | ||||||
1 | Gardner Denver Machinery, Inc.• | 25 | ||||||
1 | Hexcel Corp.• | 7 | ||||||
— | Kadant, Inc.• | 5 | ||||||
2 | McDermott International, Inc.• | 38 | ||||||
— | Mitsui & Co., Ltd. ADR | 11 | ||||||
— | Moog, Inc. Class A• | 5 | ||||||
1 | Polypore International, Inc.• | 6 | ||||||
— | RBS Bearings, Inc.• | 7 | ||||||
1 | Spirit Aerosystems Holdings, Inc.• | 17 | ||||||
— | Stanley, Inc.• | 9 | ||||||
1 | Tecumseh Products Co. Class A• | 7 | ||||||
1 | Titan International, Inc. | 9 | ||||||
— | Titan Machinery, Inc.• | 5 | ||||||
— | TransDigm Group, Inc. | 14 | ||||||
1 | Trimas Corp.• | 5 | ||||||
230 | ||||||||
Commercial & Professional Services - 0.9% | ||||||||
1 | Consolidated Graphics, Inc.• | 16 | ||||||
1 | Navigant Consulting, Inc.• | 10 | ||||||
2 | Spherion Corp.• | 11 | ||||||
— | Stericycle, Inc.• | 12 | ||||||
1 | Waste Connections, Inc.• | 19 | ||||||
68 | ||||||||
Consumer Durables & Apparel - 1.0% | ||||||||
1 | Gildan Activewear, Inc.• | 11 | ||||||
1 | Hanesbrands, Inc.• | 23 | ||||||
— | Jakks Pacific, Inc.• | 7 | ||||||
1 | Mohawk Industries, Inc.• | 24 | ||||||
— | Universal Electronics, Inc.• | 8 | ||||||
73 | ||||||||
Consumer Services - 1.4% | ||||||||
2 | Gaylord Entertainment Co.• | 25 | ||||||
1 | Grand Canyon Education, Inc.• | 10 | ||||||
2 | Lakes Entertainment, Inc.• | 5 | ||||||
1 | Scientific Games Corp. Class A• | 20 | ||||||
1 | Sonic Corp.• | 7 | ||||||
1 | Starbucks Corp.• | 14 | ||||||
1 | Texas Roadhouse, Inc.• | 9 | ||||||
— | Universal Technical Institute, Inc.• | 8 | ||||||
98 | ||||||||
Consumer Staples - 0.3% | ||||||||
— | Seaboard Corp. | 18 | ||||||
Diversified Financials - 0.2% | ||||||||
— | Nasdaq OMX Group, Inc.• | 6 | ||||||
— | Riskmetrics Group, Inc.• | 7 | ||||||
13 | ||||||||
Energy - 4.9% | ||||||||
— | Arena Resources, Inc.• | 7 | ||||||
— | Bill Barrett Corp.• | 9 | ||||||
— | Bristow Group, Inc.• | 5 | ||||||
1 | Bronco Drilling Co., Inc.• | 7 | ||||||
— | Carrizo Oil & Gas, Inc.• | 8 | ||||||
1 | Continental Resources, Inc.• | 32 | ||||||
1 | Denbury Resources, Inc.• | 18 | ||||||
3 | Exco Resources, Inc. | 44 | ||||||
1 | Forest Oil Corp.• | 23 | ||||||
— | Goodrich Petroleum Corp.• | 8 | ||||||
4 | Hercules Offshore, Inc.• | 21 | ||||||
1 | Hess Corp. | 33 | ||||||
1 | Key Energy Services, Inc.• | 7 | ||||||
4 | Parker Drilling Co.• | 22 | ||||||
1 | Petrohawk Energy Corp.• | 27 | ||||||
— | Plains Exploration & Production Co.• | 6 | ||||||
2 | Sandridge Energy, Inc.• | 17 | ||||||
1 | Suncor Energy, Inc. | 35 | ||||||
1 | TETRA Technologies, Inc.• | 10 | ||||||
— | Ultra Petroleum Corp.• | 22 | ||||||
361 | ||||||||
Food & Staples Retailing - 0.5% | ||||||||
1 | United Natural Foods, Inc.• | 33 | ||||||
Food, Beverage & Tobacco - 1.9% | ||||||||
1 | Chiquita Brands International, Inc.• | 18 | ||||||
— | Dean Foods Co.• | 6 | ||||||
1 | Dr. Pepper Snapple Group• | 40 | ||||||
1 | Hain Celestial Group, Inc.• | 20 | ||||||
— | Hansen National Corp.• | 9 | ||||||
2 | Omega Protein Corp.• | 7 | ||||||
2 | Smithfield Foods, Inc.• | 33 | ||||||
133 | ||||||||
Health Care Equipment & Services - 0.3% | ||||||||
1 | Boston Scientific Corp.• | 8 | ||||||
— | Hologic, Inc.• | 7 | ||||||
— | NuVasive, Inc.• | 6 | ||||||
21 | ||||||||
Household & Personal Products - 0.1% | ||||||||
— | Energizer Holdings, Inc.• | 6 | ||||||
Insurance - 0.2% | ||||||||
3 | Conseco, Inc.• | 13 | ||||||
Materials - 2.8% | ||||||||
— | Agnico Eagle Mines Ltd. | 12 | ||||||
1 | Buckeye Technologies, Inc.• | 12 | ||||||
— | Deltic Timber Corp. | 10 | ||||||
— | FMC Corp. | 25 | ||||||
8 | Graphic Packaging Holding Co.• | 18 | ||||||
— | Haynes International, Inc.• | 14 | ||||||
2 | Headwaters, Inc.• | 9 | ||||||
1 | Intrepid Potash, Inc.• | 31 |
8
Shares or Principal Amount | Market Value ╪ | |||||||
SECURITIES SOLD SHORT - 36.9% - (continued) | ||||||||
COMMON STOCK - 36.9% - (continued) | ||||||||
Materials - - 2.8% - (continued) | ||||||||
1 | Rockwood Holdings, Inc.• | $ | 11 | |||||
1 | RTI International Metals, Inc.• | 19 | ||||||
16 | Smurfit-Stone Container Corp.• | 10 | ||||||
2 | Sterlite Industries Ltd. | 34 | ||||||
205 | ||||||||
Media - 1.5% | ||||||||
2 | CTC Media, Inc.• | 32 | ||||||
1 | DISH Network Corp.• | 19 | ||||||
2 | Liberty Media Corp. - Capital• | 43 | ||||||
1 | Liberty Media Corp. - Entertainment• | 16 | ||||||
— | Scholastic Corp. | 2 | ||||||
112 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 2.1% | ||||||||
1 | Auxilium Pharmaceuticals, Inc.• | 18 | ||||||
1 | Cadence Pharmaceuticals, Inc.• | 5 | ||||||
2 | Caraco Pharmaceutical Laboratories Ltd.• | 6 | ||||||
3 | Cypress Bioscience• | 17 | ||||||
5 | DURECT Corp.• | 10 | ||||||
5 | Elan Corp. plc ADR• | 26 | ||||||
1 | Impax Laboratories, Inc.• | 8 | ||||||
— | Optimer Pharmaceuticals, Inc.• | 6 | ||||||
1 | Questcor Pharmaceuticals• | 3 | ||||||
2 | Salix Pharmaceuticals Ltd.• | 34 | ||||||
3 | SuperGen, Inc.• | 8 | ||||||
1 | Xenoport, Inc.• | 14 | ||||||
155 | ||||||||
Real Estate - 0.2% | ||||||||
1 | Douglas Emmett, Inc. | 17 | ||||||
Retailing - 1.5% | ||||||||
1 | AnnTaylor Stores Corp.• | 11 | ||||||
2 | Chico’s FAS, Inc.• | 28 | ||||||
1 | Collective Brands, Inc.• | 10 | ||||||
1 | Dress Barn, Inc.• | 14 | ||||||
1 | Liberty Media - Interactive A• | 12 | ||||||
1 | LKQ Corp.• | 10 | ||||||
— | O’Reilly Automotive, Inc.• | 13 | ||||||
2 | Sally Beauty Co., Inc.• | 10 | ||||||
108 | ||||||||
Semiconductors & Semiconductor Equipment - 1.9% | ||||||||
— | Atheros Communications, Inc.• | 10 | ||||||
6 | Atmel Corp.• | 21 | ||||||
— | Cymer, Inc.• | 7 | ||||||
1 | Diodes, Inc.• | 17 | ||||||
3 | LSI Corp.• | 18 | ||||||
3 | Micron Technology, Inc.• | 23 | ||||||
1 | Microsemi Corp.• | 12 | ||||||
— | MKS Instruments, Inc.• | 5 | ||||||
— | Rambus, Inc.• | 7 | ||||||
— | Silicon Laboratories, Inc.• | 11 | ||||||
1 | Teradyne, Inc.• | 7 | ||||||
138 | ||||||||
Services - 0.1% | ||||||||
1 | Live Nation, Inc.• | 8 | ||||||
Software & Services - 2.1% | ||||||||
— | Affiliated Computer Services, Inc. Class A• | 25 | ||||||
1 | Ariba, Inc.• | 11 | ||||||
— | Computer Sciences Corp.• | 18 | ||||||
— | EPIQ Systems, Inc.• | 5 | ||||||
— | IAC/Interactive Corp.• | 7 | ||||||
— | Informatica Corp.• | 8 | ||||||
2 | Internet Capital• | 16 | ||||||
2 | Liquidity Services, Inc.• | 20 | ||||||
1 | Mentor Graphics Corp.• | 7 | ||||||
1 | Red Hat, Inc.• | 17 | ||||||
— | Tyler Corp.• | 9 | ||||||
1 | Valueclick, Inc.• | 9 | ||||||
152 | ||||||||
Technology Hardware & Equipment - 2.8% | ||||||||
— | Agilent Technologies, Inc.• | 8 | ||||||
1 | Aruba Networks, Inc.• | 6 | ||||||
1 | Ciena Corp.• | 7 | ||||||
1 | Cogent, Inc.• | 6 | ||||||
2 | Cogo Group, Inc.• | 10 | ||||||
— | Coherent, Inc.• | 6 | ||||||
— | Hughes Communications Inc.• | 10 | ||||||
1 | Infinera Corp.• | 7 | ||||||
1 | Intermec, Inc.• | 16 | ||||||
1 | Juniper Networks, Inc.• | 18 | ||||||
— | Maxwell Technologies, Inc.• | 9 | ||||||
1 | Polycom, Inc.• | 31 | ||||||
— | Research In Motion Ltd.• | 15 | ||||||
2 | Sanmina-Sci Corp.• | 13 | ||||||
4 | Sycamore Networks, Inc.• | 12 | ||||||
1 | Tellabs, Inc.• | 7 | ||||||
1 | Trimble Navigation Ltd.• | 16 | ||||||
— | ViaSat, Inc.• | 8 | ||||||
205 | ||||||||
Telecommunication Services - 3.9% | ||||||||
1 | Cbeyond, Inc.• | 20 | ||||||
1 | Crown Castle International Corp.• | 35 | ||||||
1 | Leap Wireless International, Inc.• | 18 | ||||||
20 | Level 3 Communications Corp.• | 24 | ||||||
1 | NII Holdings, Inc. Class B• | 28 | ||||||
1 | Premiere Global Services, Inc.• | 5 | ||||||
— | Rostelecom ADR | 16 | ||||||
1 | SBA Communications Corp.• | 37 | ||||||
1 | Syniverse Holdings, Inc.• | 13 | ||||||
3 | Telmex Internacional | 38 | ||||||
1 | TW Telecom, Inc.• | 17 | ||||||
1 | US Cellular Corp.• | 32 | ||||||
283 | ||||||||
Transportation - 0.3% | ||||||||
— | American Commercial Lines, Inc.• | 8 | ||||||
1 | Atlas Air Worldwide Holdings, Inc.• | 17 | ||||||
25 | ||||||||
Utilities - 2.4% | ||||||||
1 | Allegheny Energy, Inc. | 12 | ||||||
— | CH Energy Group | 6 | ||||||
9 | Dynegy Holdings, Inc.• | 18 | ||||||
1 | El Paso Electric Co.• | 23 | ||||||
— | EQT Corp. | 13 |
9
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
SECURITIES SOLD SHORT - 36.9% - (continued) | ||||||||||||
COMMON STOCK - 36.9% - (continued) | ||||||||||||
Utilities - - 2.4% - (continued) | ||||||||||||
1 | MDU Resources Group, Inc. | $ | 28 | |||||||||
— | Northwest Natural Gas Co. | 18 | ||||||||||
1 | PG&E Corp. | 23 | ||||||||||
4 | RRI Energy, Inc. | 21 | ||||||||||
— | South Jersey Industries, Inc. | 11 | ||||||||||
173 | ||||||||||||
Total common stock (proceeds $2,578) | $ | 2,689 | ||||||||||
Total securities sold short (proceeds $2,578) | 36.9 | % | $ | 2,689 | ||||||||
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 51.73% of total net assets at October 31, 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 October 31, 2009, the cost of securities (net proceeds received from securities sold short) for federal income tax purposes was $10,361 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 1,563 | ||
Unrealized Depreciation | (2,054 | ) | ||
Net Unrealized Depreciation | $ | (491 | ) | |
• | Security has not paid a dividend during the Fund’s fiscal year. | |
‡ | 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. |
10
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 9,875 | $ | 9,875 | $ | — | $ | — | ||||||||
Short-Term Investments | 107 | 107 | — | — | ||||||||||||
Total | $ | 9,982 | $ | 9,982 | $ | — | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Securities Sold Short — Common Stock ‡ | $ | 2,689 | $ | 2,689 | $ | — | $ | — | ||||||||
Total | $ | 2,689 | $ | 2,689 | $ | — | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. |
11
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $10,324) | $ | 9,982 | ||
Cash | 1 | |||
Receivables: | ||||
Fund shares sold | — | |||
Dividends and interest | 24 | |||
Other assets | 1 | |||
Total assets | 10,008 | |||
Liabilities: | ||||
Securities sold short, at value (proceeds $2,578) | 2,689 | |||
Payables: | ||||
Investment management fees | 1 | |||
Distribution fees | — | |||
Dividends on securities sold short | — | |||
Accrued expenses | 24 | |||
Total liabilities | 2,714 | |||
Net assets | $ | 7,294 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 11,106 | |||
Accumulated distribution in excess of net investment income | (17 | ) | ||
Accumulated net realized loss on investments | (3,342 | ) | ||
Unrealized depreciation of investments | (453 | ) | ||
Net assets | $ | 7,294 | ||
Shares authorized | 850,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 6.42/$6.79 | ||
Shares outstanding | 898 | |||
Net assets | $ | 5,767 | ||
Class B: Net asset value per share | $ | 6.41 | ||
Shares outstanding | 34 | |||
Net assets | $ | 216 | ||
Class C: Net asset value per share | $ | 6.41 | ||
Shares outstanding | 34 | |||
Net assets | $ | 216 | ||
Class I: Net asset value per share | $ | 6.43 | ||
Shares outstanding | 34 | |||
Net assets | $ | 220 | ||
Class R3: Net asset value per share | $ | 6.42 | ||
Shares outstanding | 34 | |||
Net assets | $ | 217 | ||
Class R4: Net asset value per share | $ | 6.42 | ||
Shares outstanding | 34 | |||
Net assets | $ | 218 | ||
Class R5: Net asset value per share | $ | 6.43 | ||
Shares outstanding | 34 | |||
Net assets | $ | 220 | ||
Class Y: Net asset value per share | $ | 6.43 | ||
Shares outstanding | 34 | |||
Net assets | $ | 220 | ||
12
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 498 | ||
Interest | 1 | |||
Less: Foreign tax withheld | (15 | ) | ||
Total investment income | 484 | |||
Expenses: | ||||
Investment management fees | 63 | |||
Administrative services fees | 1 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class A | 12 | |||
Class B | 2 | |||
Class C | 2 | |||
Class R3 | 1 | |||
Class R4 | — | |||
Custodian fees | 7 | |||
Accounting services fees | 1 | |||
Registration and filing fees | — | |||
Board of Directors’ fees | 2 | |||
Dividend and interest expense on securities sold short | 12 | |||
Audit fees | 11 | |||
Short position fees | 17 | |||
Other expenses | 19 | |||
Total expenses (before waivers and fees paid indirectly) | 150 | |||
Expense waivers | (63 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (63 | ) | ||
Total expenses, net | 87 | |||
Net Investment Income | 397 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (3,903 | ) | ||
Net realized gain on securities sold short | 976 | |||
Net realized gain on other foreign currency transactions | — | |||
Net Realized Loss on Investments | (2,927 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 4,628 | |||
Net unrealized depreciation of securities sold short | (1,565 | ) | ||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | — | |||
Net Changes in Unrealized Appreciation of Investments | 3,063 | |||
Net Gain on Investments | 136 | |||
Net Increase in Net Assets Resulting from Operations | $ | 533 | ||
13
Statement of Changes in Net Assets
(000’s Omitted)
For the Period | ||||||||
November 28, | ||||||||
For the | 2007* | |||||||
Year Ended | through | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 397 | $ | 759 | ||||
Net realized loss on investments | (2,927 | ) | (482 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 3,063 | (3,516 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 533 | (3,239 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (311 | ) | (454 | ) | ||||
Class B | (10 | ) | (16 | ) | ||||
Class C | (11 | ) | (16 | ) | ||||
Class I | (12 | ) | (18 | ) | ||||
Class R3 | (11 | ) | (16 | ) | ||||
Class R4 | (12 | ) | (17 | ) | ||||
Class R5 | (12 | ) | (17 | ) | ||||
Class Y | (12 | ) | (18 | ) | ||||
Total distributions | (391 | ) | (572 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 311 | 8,354 | ||||||
Class B | 10 | 316 | ||||||
Class C | 11 | 316 | ||||||
Class I | 12 | 318 | ||||||
Class R3 | 11 | 316 | ||||||
Class R4 | 12 | 317 | ||||||
Class R5 | 12 | 317 | ||||||
Class Y | 12 | 318 | ||||||
Net increase from capital share transactions | 391 | 10,572 | ||||||
Net Increase In Net Assets | 533 | 6,761 | ||||||
Net Assets: | ||||||||
Beginning of period | 6,761 | — | ||||||
End of period | $ | 7,294 | $ | 6,761 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | (17 | ) | $ | 10 | |||
* | Commencement of operations. |
14
Notes to Financial Statements
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 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 28, 2007 through October 31, 2009. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The |
15
Notes to Financial Statements — (continued)
October 31, 2009
(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. 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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. |
16
• | 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had no outstanding forward foreign currency contracts as of October 31, 2009. | |||
e) | 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 may use 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 October 31, 2009. |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 of the Fund are declared and paid quarterly. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 October 31, 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) | 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 |
18
premium. The Fund also will incur transaction costs in executing short sales. The amount of any ultimate gain for the 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. | |||
j) | 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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 * | |||||||
Ordinary Income | $ | 391 | $ | 572 |
* | Commenced operations on November 28, 2007 |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 22 | ||
Accumulated Capital Losses * | (3,343 | ) | ||
Unrealized Depreciation † | (491 | ) | ||
Total Accumulated Deficit | $ | (3,812 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $33, increase accumulated net realized gain on investments by $35, and decrease paid-in-capital by $2. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 448 | ||
2017 | 2,895 | |||
Total | $ | 3,343 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
20
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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. | |||
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 services 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 year ended October 31, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses, short position 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 year ended October 31, 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: |
Year Ended | Year Ended | |||||||
October 31, | October 31, | |||||||
2009 | 2008 | |||||||
Class A Shares | 0.88 | % | 0.58 | %* | ||||
Class B Shares | 1.63 | 1.33 | * | |||||
Class C Shares | 1.63 | 1.33 | * | |||||
Class I Shares | 0.63 | 0.33 | * | |||||
Class R3 Shares | 1.33 | 1.03 | * | |||||
Class R4 Shares | 1.03 | 0.73 | * | |||||
Class R5 Shares | 0.73 | 0.43 | * | |||||
Class Y Shares | 0.63 | 0.33 | * |
* | From November 28, 2007 (commencement of operations), through October 31, 2008. |
21
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, HIFSCO had no revenue from front-end load sales charges or contingent deferred sales charges. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, the Fund has no sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares. | |||
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated in an amount that rounds to zero for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class A | 898 | |||
Class B | 34 | |||
Class C | 34 | |||
Class I | 34 | |||
Class R3 | 34 | |||
Class R4 | 34 | |||
Class R5 | 34 | |||
Class Y | 34 |
22
6. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 3,403 | ||
Sales Proceeds Excluding U.S. Government Obligations | 2,846 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 2009 | For the Period 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 | — | 56 | — | — | 56 | 790 | 52 | — | — | 842 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 311 | $ | — | $ | — | $ | 311 | $ | 7,900 | $ | 454 | $ | — | $ | — | $ | 8,354 | ||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 2 | — | — | 2 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 10 | $ | — | $ | — | $ | 10 | $ | 300 | $ | 16 | $ | — | $ | — | $ | 316 | ||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 2 | — | — | 2 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 11 | $ | — | $ | — | $ | 11 | $ | 300 | $ | 16 | $ | — | $ | — | $ | 316 | ||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 2 | — | — | 2 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 12 | $ | — | $ | — | $ | 12 | $ | 300 | $ | 18 | $ | — | $ | — | $ | 318 | ||||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 2 | — | — | 2 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 11 | $ | — | $ | — | $ | 11 | $ | 300 | $ | 16 | $ | — | $ | — | $ | 316 | ||||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 2 | — | — | 2 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 12 | $ | — | $ | — | $ | 12 | $ | 300 | $ | 17 | $ | — | $ | — | $ | 317 | ||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 2 | — | — | 2 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 12 | $ | — | $ | — | $ | 12 | $ | 300 | $ | 17 | $ | — | $ | — | $ | 317 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 2 | — | — | 2 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 12 | $ | — | $ | — | $ | 12 | $ | 300 | $ | 18 | $ | — | $ | — | $ | 318 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. |
23
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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. | ||
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
24
25
Financial Highlights
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.34 | $ | 0.35 | $ | — | $ | 0.09 | $ | 0.44 | $ | (0.36 | ) | $ | — | $ | — | $ | (0.36 | ) | $ | 0.08 | $ | 6.42 | ||||||||||||||||||||
B | 6.33 | 0.31 | — | 0.09 | 0.40 | (0.32 | ) | — | — | (0.32 | ) | 0.08 | 6.41 | |||||||||||||||||||||||||||||||
C | 6.33 | 0.31 | — | 0.09 | 0.40 | (0.32 | ) | — | — | (0.32 | ) | 0.08 | 6.41 | |||||||||||||||||||||||||||||||
I | 6.34 | 0.36 | — | 0.11 | 0.47 | (0.38 | ) | — | — | (0.38 | ) | 0.09 | 6.43 | |||||||||||||||||||||||||||||||
R3 | 6.34 | 0.32 | — | 0.10 | 0.42 | (0.34 | ) | — | — | (0.34 | ) | 0.08 | 6.42 | |||||||||||||||||||||||||||||||
R4 | 6.34 | 0.34 | — | 0.09 | 0.43 | (0.35 | ) | — | — | (0.35 | ) | 0.08 | 6.42 | |||||||||||||||||||||||||||||||
R5 | 6.34 | 0.36 | — | 0.10 | 0.46 | (0.37 | ) | — | — | (0.37 | ) | 0.09 | 6.43 | |||||||||||||||||||||||||||||||
Y | 6.34 | 0.36 | — | 0.11 | 0.47 | (0.38 | ) | — | — | (0.38 | ) | 0.09 | 6.43 | |||||||||||||||||||||||||||||||
From (commencement of operations) November 28, 2007, through October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A(e) | 10.00 | 0.74 | — | (3.84 | ) | (3.10 | ) | (0.56 | ) | — | — | (0.56 | ) | (3.66 | ) | 6.34 | ||||||||||||||||||||||||||||
B(e) | 10.00 | 0.68 | — | (3.84 | ) | (3.16 | ) | (0.51 | ) | — | — | (0.51 | ) | (3.67 | ) | 6.33 | ||||||||||||||||||||||||||||
C(e) | 10.00 | 0.68 | — | (3.84 | ) | (3.16 | ) | (0.51 | ) | — | — | (0.51 | ) | (3.67 | ) | 6.33 | ||||||||||||||||||||||||||||
I(e) | 10.00 | 0.76 | — | (3.84 | ) | (3.08 | ) | (0.58 | ) | — | — | (0.58 | ) | (3.66 | ) | 6.34 | ||||||||||||||||||||||||||||
R3(e) | 10.00 | 0.71 | — | (3.84 | ) | (3.13 | ) | (0.53 | ) | — | — | (0.53 | ) | (3.66 | ) | 6.34 | ||||||||||||||||||||||||||||
R4(e) | 10.00 | 0.73 | — | (3.84 | ) | (3.11 | ) | (0.55 | ) | — | — | (0.55 | ) | (3.66 | ) | 6.34 | ||||||||||||||||||||||||||||
R5(e) | 10.00 | 0.75 | — | (3.84 | ) | (3.09 | ) | (0.57 | ) | — | — | (0.57 | ) | (3.66 | ) | 6.34 | ||||||||||||||||||||||||||||
Y(e) | 10.00 | 0.76 | — | (3.84 | ) | (3.08 | ) | (0.58 | ) | — | — | (0.58 | ) | (3.66 | ) | 6.34 |
(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) | Commenced operations on November 28, 2007. | |
(f) | Not annualized. | |
(g) | Annualized. |
26
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||
7.90 | % | $ | 5,767 | 2.33 | % | 1.33 | % | 0.88 | % | 6.21 | % | 46 | % | |||||||||||||
7.12 | 216 | 3.08 | 2.08 | 1.63 | 5.46 | — | ||||||||||||||||||||
7.12 | 216 | 3.08 | 2.08 | 1.63 | 5.46 | — | ||||||||||||||||||||
8.33 | 220 | 2.08 | 1.08 | 0.63 | 6.45 | — | ||||||||||||||||||||
7.42 | 217 | 2.78 | 1.78 | 1.33 | 5.76 | — | ||||||||||||||||||||
7.74 | 218 | 2.48 | 1.48 | 1.03 | 6.06 | — | ||||||||||||||||||||
8.22 | 220 | 2.18 | 1.18 | 0.73 | 6.35 | — | ||||||||||||||||||||
8.33 | 220 | 2.08 | 1.08 | 0.63 | 6.45 | — | ||||||||||||||||||||
(32.37 | )(f) | 5,343 | 2.09 | (g) | 1.09 | (g) | 0.58 | (g) | 9.20 | (g) | 70 | |||||||||||||||
(32.86 | )(f) | 202 | 2.84 | (g) | 1.84 | (g) | 1.33 | (g) | 8.45 | (g) | — | |||||||||||||||
(32.86 | )(f) | 202 | 2.84 | (g) | 1.84 | (g) | 1.33 | (g) | 8.45 | (g) | — | |||||||||||||||
(32.24 | )(f) | 203 | 1.84 | (g) | 0.84 | (g) | 0.33 | (g) | 9.45 | (g) | — | |||||||||||||||
(32.60 | )(f) | 202 | 2.54 | (g) | 1.54 | (g) | 1.03 | (g) | 8.75 | (g) | — | |||||||||||||||
(32.44 | )(f) | 203 | 2.24 | (g) | 1.24 | (g) | 0.73 | (g) | 9.05 | (g) | — | |||||||||||||||
(32.29 | )(f) | 203 | 1.94 | (g) | 0.94 | (g) | 0.43 | (g) | 9.35 | (g) | — | |||||||||||||||
(32.24 | )(f) | 203 | 1.84 | (g) | 0.84 | (g) | 0.33 | (g) | 9.45 | (g) | — |
27
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
28
Directors and Officers (Unaudited)
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
29
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 – 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 – 2009. |
30
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
31
Federal Tax Information (Unaudited)
DRD* | 80.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.361 | N/A | N/A | 0.361 | ||||||||||||
Class B | 0.319 | N/A | N/A | 0.319 | ||||||||||||
Class C | 0.319 | N/A | N/A | 0.319 | ||||||||||||
Class I | 0.375 | N/A | N/A | 0.375 | ||||||||||||
Class R3 | 0.335 | N/A | N/A | 0.335 | ||||||||||||
Class R4 | 0.352 | N/A | N/A | 0.352 | ||||||||||||
Class R5 | 0.369 | N/A | N/A | 0.369 | ||||||||||||
Class Y | 0.375 | N/A | N/A | 0.375 |
32
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 | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,267.20 | $ | 5.94 | $ | 1,000.00 | $ | 1,019.96 | $ | 5.30 | 1.04 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,260.70 | $ | 10.20 | $ | 1,000.00 | $ | 1,016.18 | $ | 9.10 | 1.79 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,260.70 | $ | 10.20 | $ | 1,000.00 | $ | 1,016.18 | $ | 9.10 | 1.79 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,268.20 | $ | 4.52 | $ | 1,000.00 | $ | 1,021.22 | $ | 4.02 | 0.79 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,264.40 | $ | 8.50 | $ | 1,000.00 | $ | 1,017.69 | $ | 7.58 | 1.49 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,266.20 | $ | 6.80 | $ | 1,000.00 | $ | 1,019.21 | $ | 6.06 | 1.19 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,270.00 | $ | 5.09 | $ | 1,000.00 | $ | 1,020.72 | $ | 4.53 | 0.89 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,268.20 | $ | 4.52 | $ | 1,000.00 | $ | 1,021.22 | $ | 4.02 | 0.79 | 184 | 365 |
33
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
34
35
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
36
37
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
12 | ||||
13 | ||||
14 | ||||
15 | ||||
16 | ||||
28 | ||||
30 | ||||
31 | ||||
33 | ||||
33 | ||||
34 | ||||
35 | ||||
36 | ||||
37 |
The Hartford Global Equity Fund inception 02/29/2008 (subadvised by Wellington Management Company, LLP) | Investment objective — Seeks long-term capital appreciation. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
Global Equity A# | 23.65 | % | -11.87 | % | ||||
Global Equity A## | 16.85 | % | -14.81 | % | ||||
Global Equity B# | 22.89 | % | -12.52 | % | ||||
Global Equity B## | 17.89 | % | -14.62 | % | ||||
Global Equity C# | 22.91 | % | -12.51 | % | ||||
Global Equity C## | 21.91 | % | -12.51 | % | ||||
Global Equity I# | 23.97 | % | -11.65 | % | ||||
Global Equity R3# | 23.36 | % | -12.16 | % | ||||
Global Equity R4# | 23.70 | % | -11.93 | % | ||||
Global Equity R5# | 24.05 | % | -11.70 | % | ||||
Global Equity Y# | 23.85 | % | -11.70 | % | ||||
MSCI All Country World Index | 23.42 | % | -12.26 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||
Cheryl M. Duckworth, CFA | Mark D. Mandel, CFA | |
Senior Vice President | Senior Vice President |
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 1.8 | % | ||
Banks (Financials) | 11.5 | |||
Capital Goods (Industrials) | 4.5 | |||
Commercial & Professional Services (Industrials) | 0.0 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 1.2 | |||
Consumer Services (Consumer Discretionary) | 1.1 | |||
Diversified Financials (Financials) | 5.0 | |||
Energy (Energy) | 11.7 | |||
Food & Staples Retailing (Consumer Staples) | 0.3 | |||
Food, Beverage & Tobacco (Consumer Staples) | 6.8 | |||
Health Care Equipment & Services (Health Care) | 2.9 | |||
Household & Personal Products (Consumer Staples) | 0.4 | |||
Insurance (Financials) | 3.0 | |||
Materials (Materials) | 8.1 | |||
Media (Consumer Discretionary) | 1.2 | |||
Other Investment Pools and Funds (Financials) | 0.2 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 7.5 | |||
Real Estate (Financials) | 0.7 | |||
Retailing (Consumer Discretionary) | 5.4 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 1.1 | |||
Software & Services (Information Technology) | 6.8 | |||
Technology Hardware & Equipment (Information Technology) | 5.3 | |||
Telecommunication Services (Services) | 4.9 | |||
Transportation (Industrials) | 2.8 | |||
Utilities (Utilities) | 4.6 | |||
Short-Term Investments | 0.8 | |||
Other Assets and Liabilities | 0.4 | |||
Total | 100.0 | % | ||
3
as of October 31, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 1.1 | % | ||
Austria | 0.3 | |||
Belgium | 0.5 | |||
Brazil | 3.9 | |||
Canada | 4.5 | |||
China | 2.7 | |||
Denmark | 0.6 | |||
France | 3.6 | |||
Germany | 2.6 | |||
Greece | 0.0 | |||
Hong Kong | 2.7 | |||
India | 1.6 | |||
Indonesia | 0.1 | |||
Ireland | 0.4 | |||
Israel | 0.9 | |||
Italy | 0.8 | |||
Japan | 3.8 | |||
Jersey | 0.1 | |||
Luxembourg | 0.5 | |||
Malaysia | 0.0 | |||
Netherlands | 0.9 | |||
Norway | 1.1 | |||
Panama | 0.1 | |||
Philippines | 0.0 | |||
Russia | 1.4 | |||
Singapore | 0.6 | |||
South Africa | 0.5 | |||
South Korea | 0.1 | |||
Spain | 1.1 | |||
Sweden | 0.2 | |||
Switzerland | 3.1 | |||
Taiwan | 0.9 | |||
Thailand | 0.7 | |||
Turkey | 0.3 | |||
United Kingdom | 9.6 | |||
United States | 47.5 | |||
Short-Term Investments | 0.8 | |||
Other Assets and Liabilities | 0.4 | |||
Total | 100.0 | % | ||
4
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 98.4% | ||||||||
Australia - 1.1% | ||||||||
17 | Aquarius Platinum Ltd. • | $ | 74 | |||||
1 | BHP Billiton Ltd. ADR | 66 | ||||||
24 | Centamin Egypt Ltd. • | 47 | ||||||
2 | Newcrest Mining Ltd. | 55 | ||||||
61 | Pacific Brands Ltd. | 71 | ||||||
3 | Rio Tinto Ltd. | 164 | ||||||
20 | Toll Holdings Ltd. | 151 | ||||||
6 | Woolworths Ltd. | 157 | ||||||
785 | ||||||||
Austria - 0.3% | ||||||||
6 | OMV AG | 262 | ||||||
Belgium - 0.5% | ||||||||
54 | Fortis | 232 | ||||||
4 | UCB S.A. | 169 | ||||||
401 | ||||||||
Brazil - 3.7% | ||||||||
3 | B2W Companhia Global do Varejo | 76 | ||||||
44 | Banco do Estado do Rio Grande do Sul S.A. | 277 | ||||||
5 | BR Malls Participacoes S.A. • | 53 | ||||||
25 | Brasil Brokers Participacoes | 88 | ||||||
5 | Brasil Telecom S.A. ADR | 138 | ||||||
2 | Cetip S.A. - Balcao Organizado | 15 | ||||||
2 | Cia Brasileira de Meios de Pagamentos | 15 | ||||||
3 | CIA Saneamento Minas Gerais | 60 | ||||||
31 | Companhia Energetica de Minas Gerais ADR | 482 | ||||||
9 | Cosan Ltd. • | 63 | ||||||
1 | EDP - Energias do Brasil S.A. | 21 | ||||||
6 | Hypermarcas S.A. • | 116 | ||||||
42 | Itau Unibanco Banco Multiplo S.A. ADR | 804 | ||||||
3 | Multiplan Empreendimentos Imobiliarios S.A. | 48 | ||||||
20 | PDG Realty S.A. | 169 | ||||||
2 | Petroleo Brasileiro S.A. ADR | 97 | ||||||
4 | Tele Norte Leste Participacoes S.A. ADR | 70 | ||||||
14 | Tivit Terceirizacao De Tecno • | 106 | ||||||
8 | Tractebel Energia S.A. | 99 | ||||||
11 | Vale S.A. - SP ADR | 273 | ||||||
3,070 | ||||||||
Canada - 4.5% | ||||||||
1 | Agrium, Inc. | 26 | ||||||
15 | Bank of Nova Scotia | 642 | ||||||
6 | Barrick Gold Corp. | 231 | ||||||
7 | Canadian Natural Resources Ltd. ADR | 430 | ||||||
3 | Canadian Oil SandsTrust | 88 | ||||||
6 | Cott Corp. • | 43 | ||||||
2 | EnCana Corp. ADR | 112 | ||||||
9 | Exeter Resource Corp. | 46 | ||||||
1 | Husky Energy, Inc. | 24 | ||||||
7 | Ivanhoe Mines Ltd. • | 80 | ||||||
7 | National Bank of Canada | 339 | ||||||
2 | Potash Corp. of Saskatchewan, Inc. | 161 | ||||||
1 | Potash Corp. of Saskatchewan, Inc. ADR | 52 | ||||||
8 | Sino Forest Corp. • | 110 | ||||||
6 | Suncor Energy, Inc. | 184 | ||||||
7 | Teck Cominco Ltd. Class B | 209 | ||||||
11 | Toronto-Dominion Bank ADR | 644 | ||||||
26 | Uranium Participation Corp. • | 162 | ||||||
3,583 | ||||||||
China - 2.7% | ||||||||
1 | Baidu, Inc. ADR • | 320 | ||||||
63 | China Dongxiang Group Co. | 39 | ||||||
90 | China Shenhua Energy Co., Ltd. | 403 | ||||||
70 | Golden Eagle Retail Group Ltd. | 120 | ||||||
59 | Jiangsu Express Co., Ltd. | 52 | ||||||
2 | Longtop Financial Technologies Ltd. • | 53 | ||||||
49 | New World Department Store China | 44 | ||||||
121 | Parkson Retail Group Ltd. | 196 | ||||||
1 | Perfect World Co., Ltd. ADR • | 46 | ||||||
3 | PetroChina Co., Ltd. ADR | 375 | ||||||
2 | Shanda Interactive Entertainment Ltd. ADR • | 95 | ||||||
1 | Sohu.com, Inc. • | 47 | ||||||
10 | Tencent Holdings Ltd. | 179 | ||||||
22 | Tingyi Holding Corp. | 49 | ||||||
1 | Zhongpin, Inc. • | 16 | ||||||
2,034 | ||||||||
Denmark - 0.6% | ||||||||
1 | Carlsberg A/S Class B | 48 | ||||||
8 | DSV A/S | 125 | ||||||
2 | Gronlandsbanken | 121 | ||||||
1 | H. Lundbeck A/S | 22 | ||||||
– | Ringkjoebing Landbobank | 35 | ||||||
351 | ||||||||
France - 3.6% | ||||||||
1 | Accor S.A. | 27 | ||||||
3 | BNP Paribas | 232 | ||||||
1 | Electricite de France | 62 | ||||||
7 | France Telecom S.A. | 162 | ||||||
5 | Gaz de France | 200 | ||||||
5 | Groupe Danone | 325 | ||||||
1 | Ipsen | 41 | ||||||
4 | Michelin (C.G.D.E.) Class B | 307 | ||||||
4 | Peugeot S.A. | 142 | ||||||
2 | Pinault-Printemps-Redoute S.A. | 187 | ||||||
18 | Rhodia S.A. | 266 | ||||||
2 | Safran S.A. | 25 | ||||||
1 | Sanofi-Aventis S.A. | 103 | ||||||
2 | Sanofi-Aventis S.A. ADR | 76 | ||||||
3 | Societe Generale Class A | 208 | ||||||
3 | Total S.A. ADR | 153 | ||||||
1 | Unibail-Rodamco SE | 162 | ||||||
2 | Vinci S.A. | 94 | ||||||
3 | Vivendi S.A. | 85 | ||||||
2,857 | ||||||||
Germany - 2.6% | ||||||||
7 | BASF SE | 358 | ||||||
2 | Daimler AG | 83 | ||||||
6 | Deutsche Boerse AG | 476 | ||||||
9 | Deutsche Telekom AG | 118 | ||||||
12 | E.On AG | 441 | ||||||
1 | HeidelbergCement AG | 60 | ||||||
1 | Hochtief AG | 63 | ||||||
1 | SAP AG | 30 | ||||||
4 | Siemens AG | 390 | ||||||
2,019 | ||||||||
Greece - 0.0% | ||||||||
2 | Tsakos Energy Navigation Ltd. | 33 | ||||||
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 98.4% - (continued) | ||||||||
Hong Kong - 2.7% | ||||||||
45 | AMVIG Holdings Ltd. | $ | 19 | |||||
125 | Anta Sports Products Ltd. | 151 | ||||||
14 | ASM Pacific Technology | 105 | ||||||
65 | BOC Hong Kong Holdings Ltd. | 149 | ||||||
69 | China Mengniu Dairy Co. | 193 | ||||||
10 | China Resources Power Holdings Co., Ltd. | 21 | ||||||
44 | China Shanshui Cement Group | 32 | ||||||
74 | China State Construction International Holdings Ltd. | 30 | ||||||
25 | China Yurun Food Group Ltd. | 52 | ||||||
60 | CNPC Hong Kong Ltd. | 63 | ||||||
289 | Dah Sing Banking Group Ltd. | 401 | ||||||
60 | Daphne International Holdings Ltd. | 45 | ||||||
15 | Esprit Holdings Ltd. | 96 | ||||||
139 | Galaxy Entertainment Group Ltd. • | 59 | ||||||
4 | Hengan International Group Co., Ltd. | 26 | ||||||
502 | Huabao International Holdings Ltd. | 479 | ||||||
1 | Lilang China Co., Ltd. • | — | ||||||
7 | Orient Overseas International Ltd. | 32 | ||||||
16 | Peace Mark Holdings Ltd. ⌂•† | — | ||||||
28 | Ports Design Ltd. | 74 | ||||||
61 | Want Want China Holdings Ltd. | 36 | ||||||
48 | Xinao Gas Holdings Ltd. | 103 | ||||||
89 | Xtep International Holdings Ltd. | 42 | ||||||
2,208 | ||||||||
India - 1.6% | ||||||||
7 | Bank of Baroda | 70 | ||||||
8 | Bank of India | 55 | ||||||
7 | Corp. Bank | 67 | ||||||
28 | Dabur India Ltd. | 88 | ||||||
2 | HDFC Bank Ltd. ADR | 238 | ||||||
25 | Indian Overseas Bank | 53 | ||||||
22 | Marico Ltd. | 44 | ||||||
14 | Oriental Bank of Commerce | 69 | ||||||
3 | Reliance Industries Ltd. | 112 | ||||||
2 | Reliance Industries Ltd. GDR ■ | 197 | ||||||
1 | State Bank of India | 66 | ||||||
13 | Union Bank of India | 72 | ||||||
1,131 | ||||||||
Indonesia - 0.1% | ||||||||
3 | P.T. Telekomunikasi Indonesia ADR | 115 | ||||||
Ireland - 0.4% | ||||||||
3 | CRH plc | 72 | ||||||
36 | Elan Corp. plc ADR • | 195 | ||||||
2 | Ryanair Holdings plc ADR • | 63 | ||||||
330 | ||||||||
Israel - 0.9% | ||||||||
2 | Cellcom Israel Ltd. | 53 | ||||||
6 | Partner Communications Co., Ltd. ADR | 108 | ||||||
11 | Teva Pharmaceutical Industries Ltd. ADR | 573 | ||||||
734 | ||||||||
Italy - 0.8% | ||||||||
10 | Enel S.p.A. | 60 | ||||||
2 | Eni S.p.A. ADR | 110 | ||||||
13 | Snam Rete Gas S.p.A. | 64 | ||||||
311 | Telecom Italia S.p.A. | 343 | ||||||
577 | ||||||||
Japan - 3.8% | ||||||||
11 | Asahi Kasei Corp. | 54 | ||||||
1 | Astellas Pharma, Inc. | 43 | ||||||
13 | Daiichi Sankyo Co., Ltd. | 262 | ||||||
12 | Eisai Co., Ltd. | 419 | ||||||
35 | Hino Motors Ltd. | 129 | ||||||
19 | Honda Motor Co., Ltd. | 585 | ||||||
– | Japan Tobacco, Inc. | 31 | ||||||
6 | Mitsubishi Estate Co., Ltd. | 92 | ||||||
72 | Mitsubishi UFJ Financial Group, Inc. | 382 | ||||||
– | Osaka Securities Exchange Co., Ltd. | 192 | ||||||
6 | Shin-Etsu Chemical Co., Ltd. | 314 | ||||||
8 | Shionogi & Co., Ltd. | 175 | ||||||
30 | Showa Denko K.K. | 58 | ||||||
– | SMC Corp. | 14 | ||||||
19 | Tokyo Gas Co., Ltd. | 75 | ||||||
2 | Yamada Denki Co., Ltd. | 132 | ||||||
2,957 | ||||||||
Jersey - 0.1% | ||||||||
2 | Randgold Resources Ltd. ADR | 107 | ||||||
Luxembourg - 0.5% | ||||||||
5 | Millicom International Cellular S.A. • | 310 | ||||||
3 | SES Global S.A. | 60 | ||||||
370 | ||||||||
Malaysia - 0.0% | ||||||||
26 | PLUS Expressways Berhad | 25 | ||||||
13 | Tenaga Nasional Bhd | 33 | ||||||
58 | ||||||||
Netherlands - 0.9% | ||||||||
5 | Heineken N.V. | 237 | ||||||
4 | Qiagen N.V. • | 77 | ||||||
3 | SBM Offshore N.V. | 48 | ||||||
3 | TNT N.V. | 91 | ||||||
8 | Unilever N.V. CVA | 238 | ||||||
691 | ||||||||
Norway - 1.1% | ||||||||
51 | DNB Nor ASA | 582 | ||||||
31 | Marine Harvest • | 22 | ||||||
16 | Sparebanken Midt-Norge | 144 | ||||||
9 | Telenor ASA | 115 | ||||||
863 | ||||||||
Panama - 0.1% | ||||||||
5 | Banco Latinoamericano de Exportaciones S.A. ADR Class E | 72 | ||||||
Philippines - 0.0% | ||||||||
386 | Metro Pacific Investments Corp. • | 27 | ||||||
Russia - 1.4% | ||||||||
10 | Mobile Telesystems OJSC ADR | 450 | ||||||
18 | OAO Gazprom Class S ADR | 444 | ||||||
7 | Vimpel-Communications ADR | 133 | ||||||
1,027 | ||||||||
6
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 98.4% - (continued) | ||||||||
Singapore - 0.6% | ||||||||
22 | Ezra Holdings Ltd. | $ | 29 | |||||
30 | Neptune Orient Lines Ltd. | 33 | ||||||
20 | Olam International Ltd. | 39 | ||||||
59 | Oversea-Chinese Banking Corp., Ltd. | 320 | ||||||
421 | ||||||||
South Africa - 0.5% | ||||||||
1 | Anglo American Platinum Co., Ltd. | 84 | ||||||
19 | MTN Group Ltd. | 277 | ||||||
361 | ||||||||
South Korea - 0.1% | ||||||||
– | Lotte Shopping Co. • | 68 | ||||||
Spain - 1.1% | ||||||||
18 | Banco Santander Central Hispano S.A. | 282 | ||||||
1 | Laboratorios Almiral S.A. | 17 | ||||||
3 | Red Electrica Corporacion S.A. | 166 | ||||||
5 | Telefonica S.A. | 144 | ||||||
3 | Telefonica S.A. ADR | 266 | ||||||
875 | ||||||||
Sweden - 0.2% | ||||||||
1 | Assa Abloy Ab | 19 | ||||||
12 | Lundin Petroleum Ab • | 106 | ||||||
2 | Swedish Match Ab | 40 | ||||||
9 | Volvo Ab Class B | 84 | ||||||
249 | ||||||||
Switzerland - 3.1% | ||||||||
9 | GAM Holding Ltd. | 107 | ||||||
12 | Julius Baer Group Ltd. | 448 | ||||||
1 | Kuehne & Nagel International AG | 107 | ||||||
20 | Nestle S.A. | 950 | ||||||
1 | Roche Holding AG | 200 | ||||||
– | Synthes, Inc. | 28 | ||||||
22 | UBS AG | 364 | ||||||
1 | Zurich Financial Services AG | 145 | ||||||
2,349 | ||||||||
Taiwan - 0.9% | ||||||||
23 | Acer, Inc. | 54 | ||||||
15 | Delta Electronics, Inc. | 41 | ||||||
– | Delta Electronics, Inc. GDR § | 5 | ||||||
15 | Epistar Corp. | 44 | ||||||
2 | Epistar Corp. ADR ■• | 28 | ||||||
5 | High Technology Computer Corp. | 47 | ||||||
39 | Hon Hai Precision Industry Co., Ltd. | 151 | ||||||
2 | Hon Hai Precision Industry Co., Ltd. GDR § | 19 | ||||||
10 | MediaTek, Inc. | 137 | ||||||
59 | Taiwan Semiconductor Manufacturing Co., Ltd. | 107 | ||||||
633 | ||||||||
Thailand - 0.7% | ||||||||
152 | Bangkok Bank plc | 510 | ||||||
Turkey - 0.3% | ||||||||
15 | Turkcell Iletisim Hizmetleri A.S. ADR | 241 | ||||||
United Kingdom - 9.6% | ||||||||
3 | Anglo American plc • | 126 | ||||||
4 | AstraZeneca plc | 197 | ||||||
3 | AstraZeneca plc ADR | 149 | ||||||
12 | BAE Systems plc | 63 | ||||||
17 | Barclays Bank plc | 88 | ||||||
20 | Barratt Developments plc | 44 | ||||||
26 | Barratt Developments plc - Rights | 14 | ||||||
42 | BG Group plc | 726 | ||||||
4 | BHP Billiton plc | 111 | ||||||
50 | BP plc | 471 | ||||||
7 | BP plc ADR | 396 | ||||||
19 | British American Tobacco plc | 602 | ||||||
4 | Cadbury plc | 53 | ||||||
4 | Croda International plc | 50 | ||||||
35 | HSBC Holding plc | 386 | ||||||
17 | Imperial Tobacco Group plc | 506 | ||||||
7 | International Power plc | 30 | ||||||
56 | Kingfisher plc | 206 | ||||||
39 | Marks & Spencer Group plc | 217 | ||||||
11 | National Grid plc | 113 | ||||||
1 | Next plc | 35 | ||||||
25 | PureCircle Ltd. | 87 | ||||||
1 | Reckitt Benckiser Group plc | 44 | ||||||
27 | Rexam plc | 122 | ||||||
9 | Rio Tinto plc | 385 | ||||||
18 | Rolls-Royce Group plc | 134 | ||||||
1 | Royal Dutch Shell plc ADR | 35 | ||||||
1 | Severn Trent plc | 14 | ||||||
31 | Standard Chartered plc | 757 | ||||||
54 | Thomas Cook Group plc | 182 | ||||||
10 | Vedanta Resources plc | 336 | ||||||
7 | WPP plc | 64 | ||||||
26 | Xstrata plc | 370 | ||||||
7,113 | ||||||||
United States - 47.3% | ||||||||
1 | Abbott Laboratories | 56 | ||||||
2 | Abercrombie & Fitch Co. Class A | 56 | ||||||
10 | Accenture plc | 376 | ||||||
12 | ACE Ltd. | 594 | ||||||
4 | Adobe Systems, Inc. • | 121 | ||||||
3 | Aetna, Inc. | 83 | ||||||
1 | Air Products and Chemicals, Inc. | 89 | ||||||
3 | Alliance Data Systems Corp. • | 141 | ||||||
8 | Allstate Corp. | 251 | ||||||
8 | Altria Group, Inc. | 153 | ||||||
2 | Amazon.com, Inc. • | 285 | ||||||
7 | American Eagle Outfitters, Inc. | 118 | ||||||
2 | American Tower Corp. Class A • | 66 | ||||||
11 | Ameriprise Financial, Inc. | 393 | ||||||
2 | Amerisource Bergen Corp. | 49 | ||||||
1 | AMETEK, Inc. | 36 | ||||||
3 | Amgen, Inc. • | 158 | ||||||
4 | Amylin Pharmaceuticals, Inc. • | 47 | ||||||
2 | Anadarko Petroleum Corp. | 100 | ||||||
4 | Apollo Group, Inc. Class A • | 209 | ||||||
5 | Apple, Inc. • | 1,003 | ||||||
2 | Archer Daniels Midland Co. | 71 | ||||||
6 | Automatic Data Processing, Inc. | 250 | ||||||
– | AutoZone, Inc. • | 52 | ||||||
4 | Baker Hughes, Inc. | 158 | ||||||
– | Ball Corp. | 15 | ||||||
1 | Bally Technologies, Inc. • | 52 | ||||||
29 | Bank of America Corp. | 427 | ||||||
3 | Baxter International, Inc. | 151 | ||||||
3 | BE Aerospace, Inc. • | 47 | ||||||
1 | Beckman Coulter, Inc. | 75 |
7
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 98.4% - (continued) | ||||||||
United States - 47.3% - (continued) | ||||||||
11 | Best Buy Co., Inc. | $ | 422 | |||||
18 | Blockbuster, Inc. Class A • | 15 | ||||||
2 | BMC Software, Inc. • | 76 | ||||||
4 | Boeing Co. | 204 | ||||||
1 | Broadcom Corp. Class A • | 29 | ||||||
2 | Cabot Oil & Gas Corp. | 87 | ||||||
9 | Cardinal Health, Inc. | 263 | ||||||
3 | CareFusion Corp. • | 62 | ||||||
1 | Carlisle Cos., Inc. | 19 | ||||||
1 | Caterpillar, Inc. | 80 | ||||||
1 | Celanese Corp. | 23 | ||||||
1 | Cental Euro Distribution Corp. • | 40 | ||||||
2 | CenturyTel, Inc. | 49 | ||||||
1 | Cephalon, Inc. • | 71 | ||||||
2 | Chesapeake Energy Corp. | 58 | ||||||
3 | Chevron Corp. | 204 | ||||||
4 | China Natural Gas • | 42 | ||||||
27 | Cisco Systems, Inc. • | 615 | ||||||
52 | Citizens Republic Bancorp, Inc. • | 32 | ||||||
3 | CMS Energy Corp. | 39 | ||||||
4 | Coach, Inc. | 127 | ||||||
2 | Coca-Cola Enterprises, Inc. | 42 | ||||||
5 | Comcast Corp. Class A | 72 | ||||||
4 | ConocoPhillips Holding Co. | 178 | ||||||
2 | Consol Energy, Inc. | 84 | ||||||
7 | Constellation Brands, Inc. Class A • | 111 | ||||||
1 | Con-way, Inc. | 38 | ||||||
1 | Cooper Industries plc Class A | 27 | ||||||
45 | Covenant Transport • | 225 | ||||||
1 | Coventry Health Care, Inc. • | 24 | ||||||
9 | Covidien plc | 378 | ||||||
5 | Crexus Investment Corp. • | 65 | ||||||
3 | Crown Castle International Corp. • | 90 | ||||||
4 | Cytec Industries, Inc. | 128 | ||||||
2 | Danaher Corp. | 163 | ||||||
2 | Dell, Inc. • | 33 | ||||||
5 | Devon Energy Corp. | 292 | ||||||
1 | DirecTV Group, Inc. • | 29 | ||||||
8 | Discover Financial Services, Inc. | 113 | ||||||
1 | Discovery Communications, Inc. • | 23 | ||||||
1 | Dover Corp. | 23 | ||||||
3 | Dow Chemical Co. | 76 | ||||||
12 | Dr. Pepper Snapple Group • | 339 | ||||||
2 | DreamWorks Animation SKG, Inc. • | 55 | ||||||
1 | Eclipsys Corp. • | 10 | ||||||
12 | Eli Lilly & Co. | 413 | ||||||
4 | EOG Resources, Inc. | 326 | ||||||
2 | EQT Corp. | 99 | ||||||
1 | Equinix, Inc. • | 69 | ||||||
2 | Everest Re Group Ltd. | 175 | ||||||
8 | Exelon Corp. | 376 | ||||||
13 | Exxon Mobil Corp. | 912 | ||||||
5 | FedEx Corp. | 329 | ||||||
– | Fluor Corp. | 17 | ||||||
4 | FMC Corp. | 208 | ||||||
29 | Ford Motor Co. • | 205 | ||||||
7 | Forest City Enterprises, Inc. Class A | 57 | ||||||
4 | Forest Laboratories, Inc. • | 124 | ||||||
7 | Fortune Brands, Inc. | 270 | ||||||
4 | Forward Air Corp. | 89 | ||||||
2 | FPL Group, Inc. | 74 | ||||||
1 | Franklin Resources, Inc. | 83 | ||||||
1 | Freeport-McMoRan Copper & Gold, Inc. | 44 | ||||||
2 | Frontline Ltd. | 48 | ||||||
3 | GameStop Corp. Class A • | 78 | ||||||
28 | Gap, Inc. | 595 | ||||||
3 | General Dynamics Corp. | 200 | ||||||
23 | General Electric Co. | 323 | ||||||
1 | General Mills, Inc. | 72 | ||||||
2 | Genesee & Wyoming, Inc. Class A • | 70 | ||||||
1 | Genzyme Corp. • | 69 | ||||||
2 | Gilead Sciences, Inc. • | 104 | ||||||
4 | Goldman Sachs Group, Inc. | 617 | ||||||
1 | Google, Inc. • | 593 | ||||||
3 | Halliburton Co. | 93 | ||||||
2 | Health Net, Inc. • | 25 | ||||||
1 | Herbalife Ltd. | 29 | ||||||
7 | Hess Corp. | 402 | ||||||
16 | Hewlett-Packard Co. | 745 | ||||||
2 | Hospira, Inc. • | 74 | ||||||
3 | Hub Group, Inc. • | 86 | ||||||
1 | IBM Corp. | 142 | ||||||
1 | IDEX Corp. | 20 | ||||||
5 | Illinois Tool Works, Inc. | 207 | ||||||
3 | Ingersoll-Rand plc | 105 | ||||||
4 | Invesco Ltd. | 93 | ||||||
10 | J.B. Hunt Transport Services, Inc. | 313 | ||||||
3 | Johnson & Johnson | 151 | ||||||
2 | Johnson Controls, Inc. | 41 | ||||||
2 | Juniper Networks, Inc. • | 57 | ||||||
1 | Kellogg Co. | 74 | ||||||
2 | King Pharmaceuticals, Inc. • | 21 | ||||||
2 | Kohl’s Corp. • | 136 | ||||||
9 | Leap Wireless International, Inc. • | 124 | ||||||
1 | Lockheed Martin Corp. | 88 | ||||||
2 | Lorillard, Inc. | 122 | ||||||
10 | Macy’s, Inc. | 176 | ||||||
4 | Marathon Oil Corp. | 123 | ||||||
5 | Marsh & McLennan Cos., Inc. | 117 | ||||||
– | Martin Marietta Materials, Inc. | 41 | ||||||
– | Marvel Entertainment, Inc. • | 12 | ||||||
13 | Maxim Integrated Products, Inc. | 219 | ||||||
2 | McAfee, Inc. • | 74 | ||||||
4 | McDonald’s Corp. | 205 | ||||||
3 | McGraw-Hill Cos., Inc. | 79 | ||||||
5 | McKesson Corp. | 308 | ||||||
3 | Medicines Co. • | 23 | ||||||
8 | Medtronic, Inc. | 278 | ||||||
21 | Merck & Co., Inc. | 659 | ||||||
2 | MetroPCS Communications, Inc. • | 15 | ||||||
32 | Microsoft Corp. | 891 | ||||||
1 | Mistras Group, Inc. • | 13 | ||||||
6 | Mosaic Co. | 300 | ||||||
15 | Motorola, Inc. | 124 | ||||||
3 | Mylan, Inc. • | 46 | ||||||
6 | N.V. Energy, Inc. | 64 |
8
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 98.4% - (continued) | ||||||||
United States - 47.3% - (continued) | ||||||||
18 | Nasdaq OMX Group, Inc. • | $ | 329 | |||||
1 | National Oilwell Varco, Inc. • | 52 | ||||||
2 | NetApp, Inc. • | 62 | ||||||
4 | Netease.com, Inc. • | 147 | ||||||
1 | New Oriental Education & Technology Group, Inc. ADR • | 75 | ||||||
6 | NII Holdings, Inc. Class B • | 169 | ||||||
2 | Noble Energy, Inc. | 117 | ||||||
10 | Northeast Utilities | 224 | ||||||
1 | Northrop Grumman Corp. | 64 | ||||||
2 | Occidental Petroleum Corp. | 189 | ||||||
1 | OGE Energy Corp. | 29 | ||||||
22 | Omega Navigation Enterprises | 74 | ||||||
27 | Oracle Corp. | 569 | ||||||
1 | OSI Pharmaceuticals, Inc. • | 37 | ||||||
2 | Overseas Shipholding Group, Inc. | 70 | ||||||
1 | PAREXEL International Corp. • | 17 | ||||||
3 | Parker-Hannifin Corp. | 163 | ||||||
3 | Peabody Energy Corp. | 119 | ||||||
1 | Penn National Gaming, Inc. • | 33 | ||||||
4 | Pentair, Inc. | 131 | ||||||
4 | PepsiCo, Inc. | 243 | ||||||
49 | Pfizer, Inc. | 840 | ||||||
4 | PG&E Corp. | 172 | ||||||
7 | Philip Morris International, Inc. | 336 | ||||||
1 | Pinnacle West Capital Corp. | 44 | ||||||
5 | Platinum Underwriters Holdings Ltd. | 161 | ||||||
1 | PNC Financial Services Group, Inc. | 33 | ||||||
60 | Popular, Inc. | 130 | ||||||
2 | Praxair, Inc. | 120 | ||||||
5 | QLogic Corp. • | 86 | ||||||
11 | Qualcomm, Inc. | 471 | ||||||
1 | Questar Corp. | 53 | ||||||
2 | Regeneron Pharmaceuticals, Inc. • | 34 | ||||||
1 | Rigel Pharmaceuticals, Inc. • | 4 | ||||||
2 | Rockwell Automation, Inc. | 94 | ||||||
1 | Rockwood Holdings, Inc. • | 28 | ||||||
2 | Ross Stores, Inc. | 90 | ||||||
– | SBA Communications Corp. • | 10 | ||||||
4 | Schlumberger Ltd. | 235 | ||||||
– | Scripps Networks Interactive Class A | 12 | ||||||
25 | Seagate Technology | 347 | ||||||
1 | Sempra Energy | 64 | ||||||
2 | Sherwin-Williams Co. | 116 | ||||||
5 | Smithfield Foods, Inc. • | 67 | ||||||
23 | Solutia, Inc. • | 249 | ||||||
1 | Sonoco Products Co. | 16 | ||||||
3 | St. Jude Medical, Inc. • | 96 | ||||||
11 | Staples, Inc. | 237 | ||||||
– | Strayer Education, Inc. | 25 | ||||||
2 | Sunpower Corp. • | 55 | ||||||
4 | Target Corp. | 192 | ||||||
2 | Teekay Tankers Ltd. | 13 | ||||||
1 | Teledyne Technologies, Inc. • | 48 | ||||||
8 | Tellabs, Inc. • | 50 | ||||||
3 | Texas Instruments, Inc. | 69 | ||||||
2 | Thermo Fisher Scientific, Inc. • | 82 | ||||||
2 | THQ, Inc. • | 11 | ||||||
1 | Time Warner Cable, Inc. | 55 | ||||||
3 | Time Warner, Inc. | 92 | ||||||
3 | TiVo, Inc. • | 32 | ||||||
2 | TJX Cos., Inc. | 81 | ||||||
6 | Transatlantic Holdings, Inc. | 283 | ||||||
1 | Transocean, Inc. • | 57 | ||||||
8 | TriQuint Semiconductor, Inc. • | 46 | ||||||
7 | TW Telecom, Inc. • | 84 | ||||||
1 | Ultra Petroleum Corp. • | 48 | ||||||
3 | UniSource Energy Corp. | 80 | ||||||
5 | United Parcel Service, Inc. Class B | 281 | ||||||
4 | United Technologies Corp. | 249 | ||||||
12 | UnitedHealth Group, Inc. | 314 | ||||||
17 | Unum Group | 348 | ||||||
6 | Valero Energy Corp. | 101 | ||||||
2 | Vertex Pharmaceuticals, Inc. • | 58 | ||||||
3 | Visa, Inc. | 200 | ||||||
– | Vitamin Shoppe, Inc. | 2 | ||||||
1 | Walgreen Co. | 27 | ||||||
10 | Walt Disney Co. | 263 | ||||||
57 | Washington Mutual, Inc. Private Placement ⌂•† | 7 | ||||||
1 | Watson Pharmaceuticals, Inc. • | 42 | ||||||
2 | Weatherford International Ltd. • | 40 | ||||||
1 | Wellpoint, Inc. • | 39 | ||||||
18 | Wells Fargo & Co. | 498 | ||||||
30 | Western Union Co. | 548 | ||||||
2 | Williams Cos., Inc. | 29 | ||||||
4 | Xcel Energy, Inc. | 71 | ||||||
4 | Xilinx, Inc. | 86 | ||||||
1 | XTO Energy, Inc. | 31 | ||||||
15 | Yahoo!, Inc. • | 239 | ||||||
36,345 | ||||||||
Total common stocks (cost $71,799) | $ | 75,827 | ||||||
PREFERRED STOCKS - 0.2% | ||||||||
Brazil - 0.2% | ||||||||
3 | Banco Itau Holding | $ | 55 | |||||
3 | Telemar Norte Leste S.A. | 96 | ||||||
151 | ||||||||
Total preferred stocks (cost $135) | $ | 151 | ||||||
WARRANTS - 0.0% | ||||||||
United States - 0.0% | ||||||||
7 | Washington Mutual, Inc. Private Placement ⌂•† | $ | — | |||||
Total warrants (cost $–) | $ | — | ||||||
EXCHANGE TRADED FUNDS - 0.2% | ||||||||
United States - 0.2% | ||||||||
6 | Industrial Select Sector SPDR Fund | $ | 157 | |||||
1 | iShares Goldman Sachs Tech I Index Fund | 44 | ||||||
Total exchange traded funds (cost $199) | $ | 201 | ||||||
Total long-term investments (cost $72,133) | $ | 76,179 | ||||||
9
Schedule of Investments — (continued) October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS - 0.8% | ||||||||||||
Repurchase Agreements - 0.8% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $23, collateralized by GNMA 5.00%, 2039, value of $24) | ||||||||||||
$ | 23 | 0.08%, 10/30/2009 | $ | 23 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $137, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $140) | ||||||||||||
137 | 0.08%, 10/30/2009 | 137 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $153, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $156) | ||||||||||||
153 | 0.08%, 10/30/2009 | 153 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $2, collateralized by U.S. Treasury Note 2.75%, 2013, value of $2) | ||||||||||||
2 | 0.05%, 10/30/2009 | 2 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $264, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $270) | ||||||||||||
264 | 0.07%, 10/30/2009 | 264 | ||||||||||
579 | ||||||||||||
Total short-term investments (cost $579) | $ | 579 | ||||||||||
Total investments (cost $72,712)▲ | 99.6 | % | $ | 76,758 | ||||||||
Other assets and liabilities | 0.4 | % | 323 | |||||||||
Total net assets | 100 .0 | % | $ | 77,081 | ||||||||
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 51.3% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $75,206 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 7,060 | ||
Unrealized Depreciation | (5,508 | ) | ||
Net Unrealized Appreciation | $ | 1,552 | ||
† | 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 October 31, 2009, was $7, which represents 0.01% of total net assets. This amount excludes securities that are principally traded in certain foreign markets and whose prices are 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 October 31, 2009, was $225, which represents 0.29% 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 October 31, 2009, the market value of these securities amounted to $24 or 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 | |||||||
02/2008 - 05/2008 | 16 | Peace Mark Holdings Ltd. | $ | 17 | ||||||
04/2008 | 7 | Washington Mutual, Inc. Private Placement Warrants | – | |||||||
04/2008 | 57 | Washington Mutual, Inc. Private Placement | 500 |
10
Unrealized | ||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||
British Pound (Sell) | $ | 69 | $ | 69 | 11/02/09 | $ | — | |||||||
British Pound (Sell) | 9 | 9 | 11/03/09 | — | ||||||||||
British Pound (Sell) | 94 | 94 | 11/04/09 | — | ||||||||||
Canadian Dollar (Sell) | 36 | 36 | 11/04/09 | — | ||||||||||
Danish Krone (Sell) | 1 | 1 | 11/02/09 | — | ||||||||||
Euro (Buy) | 34 | 34 | 11/02/09 | — | ||||||||||
Euro (Sell) | 8 | 8 | 11/02/09 | — | ||||||||||
Euro (Buy) | 35 | 35 | 11/03/09 | — | ||||||||||
Euro (Sell) | 23 | 23 | 11/02/09 | — | ||||||||||
Euro (Sell) | 155 | 156 | 11/03/09 | 1 | ||||||||||
Hong Kong Dollar (Buy) | 80 | 80 | 11/03/09 | — | ||||||||||
Hong Kong Dollar (Sell) | 11 | 11 | 11/03/09 | — | ||||||||||
Japanese Yen (Buy) | 22 | 22 | 11/05/09 | — | ||||||||||
Norwegian Krone (Buy) | 4 | 4 | 11/03/09 | — | ||||||||||
Norwegian Krone (Sell) | 1 | 1 | 11/02/09 | — | ||||||||||
Singapore Dollar (Buy) | 49 | 49 | 11/04/09 | — | ||||||||||
South African Rand (Buy) | 5 | 5 | 11/05/09 | — | ||||||||||
Swiss Franc (Sell) | 20 | 20 | 11/02/09 | — | ||||||||||
Swiss Franc (Sell) | 22 | 22 | 11/03/09 | — | ||||||||||
$ | 1 | |||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
11
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Automobiles & Components | $ | 1,363 | $ | 246 | $ | 1,117 | $ | — | ||||||||
Banks | 8,765 | 3,709 | 5,049 | 7 | ||||||||||||
Capital Goods | 3,408 | 2,363 | 1,045 | — | ||||||||||||
Commercial & Professional Services | 13 | 13 | — | — | ||||||||||||
Consumer Durables & Apparel | 975 | 580 | 395 | — | ||||||||||||
Consumer Services | 867 | 599 | 268 | — | ||||||||||||
Diversified Financials | 3,846 | 2,680 | 1,166 | — | ||||||||||||
Energy | 9,064 | 6,844 | 2,220 | — | ||||||||||||
Food & Staples Retailing | 223 | 27 | 196 | — | ||||||||||||
Food, Beverage & Tobacco | 5,261 | 1,792 | 3,469 | — | ||||||||||||
Health Care Equipment & Services | 2,257 | 2,229 | 28 | — | ||||||||||||
Household & Personal Products | 347 | 145 | 202 | — | ||||||||||||
Insurance | 2,306 | 1,929 | 377 | — | ||||||||||||
Materials | 6,334 | 2,745 | 3,589 | — | ||||||||||||
Media | 901 | 692 | 209 | — | ||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences | 5,774 | 4,049 | 1,725 | — | ||||||||||||
Real Estate | 565 | 311 | 254 | — | ||||||||||||
Retailing | 4,099 | 2,727 | 1,372 | — | ||||||||||||
Semiconductors & Semiconductor Equipment | 870 | 477 | 393 | — | ||||||||||||
Software & Services | 5,228 | 5,019 | 209 | — | ||||||||||||
Technology Hardware & Equipment | 4,052 | 3,759 | 293 | — | ||||||||||||
Telecommunication Services | 3,650 | 2,491 | 1,159 | — | ||||||||||||
Transportation | 2,184 | 1,568 | 616 | — | ||||||||||||
Utilities | 3,475 | 2,093 | 1,382 | — | ||||||||||||
Total | 75,827 | 49,087 | 26,733 | 7 | ||||||||||||
Exchange Traded Funds | 201 | 201 | — | — | ||||||||||||
Preferred Stocks ‡ | 151 | 151 | — | — | ||||||||||||
Warrants ‡ | — | — | — | — | ||||||||||||
Short-Term Investments | 579 | — | 579 | — | ||||||||||||
Total | $ | 76,758 | $ | 49,439 | $ | 27,312 | $ | 7 | ||||||||
Other Financial Instruments * | $ | 1 | $ | — | $ | 1 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | — | $ | — | $ | — | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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. |
Balance as of | Change in | Balance as of | ||||||||||||||||||
October 31, | Realized Gain | Unrealized | October 31, | |||||||||||||||||
2008 | (Loss) | Depreciation | Net Purchases | 2009 | ||||||||||||||||
Assets: | ||||||||||||||||||||
Common Stock | $ | — | $ | (1 | ) | $ | (491 | )* | $ | 499 | $ | 7 | ||||||||
Total | $ | — | $ | (1 | ) | $ | (491 | ) | $ | 499 | $ | 7 | ||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $(493). |
12
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $72,712) | $ | 76,758 | ||
Cash | 120 | |||
Foreign currency on deposit with custodian (cost $77) | 80 | |||
Unrealized appreciation on forward foreign currency contracts | 1 | |||
Receivables: | ||||
Investment securities sold | 1,191 | |||
Fund shares sold | 33 | |||
Dividends and interest | 230 | |||
Other assets | 114 | |||
Total assets | 78,527 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | — | |||
Payables: | ||||
Investment securities purchased | 1,135 | |||
Fund shares redeemed | 231 | |||
Investment management fees | 12 | |||
Distribution fees | 6 | |||
Accrued expenses | 62 | |||
Total liabilities | 1,446 | |||
Net assets | $ | 77,081 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 103,745 | |||
Accumulated undistributed net investment income | 47 | |||
Accumulated net realized loss on investments and foreign currency transactions | (30,761 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 4,050 | |||
Net assets | $ | 77,081 | ||
Shares authorized | 850,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.01/$8.48 | ||
Shares outstanding | 5,935 | |||
Net assets | $ | 47,527 | ||
Class B: Net asset value per share | $ | 7.97 | ||
Shares outstanding | 1,125 | |||
Net assets | $ | 8,964 | ||
Class C: Net asset value per share | $ | 7.97 | ||
Shares outstanding | 1,794 | |||
Net assets | $ | 14,297 | ||
Class I: Net asset value per share | $ | 8.02 | ||
Shares outstanding | 40 | |||
Net assets | $ | 317 | ||
Class R3: Net asset value per share | $ | 8.00 | ||
Shares outstanding | 31 | |||
Net assets | $ | 248 | ||
Class R4: Net asset value per share | $ | 8.01 | ||
Shares outstanding | 30 | |||
Net assets | $ | 243 | ||
Class R5: Net asset value per share | $ | 8.02 | ||
Shares outstanding | 30 | |||
Net assets | $ | 244 | ||
Class Y: Net asset value per share | $ | 8.01 | ||
Shares outstanding | 654 | |||
Net assets | $ | 5,241 | ||
13
Investment Income: | ||||
Dividends | $ | 546 | ||
Interest | 3 | |||
Less: Foreign tax withheld | (38 | ) | ||
Total investment income | 511 | |||
Expenses: | ||||
Investment management fees | 251 | |||
Administrative services fees | 1 | |||
Transfer agent fees | 59 | |||
Distribution fees | ||||
Class A | 49 | |||
Class B | 18 | |||
Class C | 29 | |||
Class R3 | 1 | |||
Class R4 | 1 | |||
Custodian fees | 40 | |||
Accounting services fees | 4 | |||
Registration and filing fees | 110 | |||
Board of Directors’ fees | 2 | |||
Audit fees | 8 | |||
Other expenses | 22 | |||
Total expenses (before waivers and fees paid indirectly) | 595 | |||
Expense waivers | (130 | ) | ||
Transfer agent fee waivers | (3 | ) | ||
Commission recapture | (1 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (134 | ) | ||
Total expenses, net | 461 | |||
Net Investment Income | 50 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (911 | ) | ||
Net realized loss on futures | (372 | ) | ||
Net realized gain on forward foreign currency contracts | 42 | |||
Net realized loss on other foreign currency transactions | (19 | ) | ||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (1,260 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 5,494 | |||
Net unrealized depreciation of futures | (4 | ) | ||
Net unrealized depreciation of forward foreign currency contracts | (2 | ) | ||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 4 | |||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions | 5,492 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 4,232 | |||
Net Increase in Net Assets Resulting from Operations | $ | 4,282 | ||
14
For the Period | ||||||||
February 29, | ||||||||
For the | 2008* | |||||||
Year Ended | through | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 50 | $ | 99 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (1,260 | ) | (1,314 | ) | ||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 5,492 | (6,249 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 4,282 | (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 | 31,553 | † | 19,466 | |||||
Class B | 8,540 | ‡ | 331 | |||||
Class C | 13,780 | § | 341 | |||||
Class I | 77 | 304 | ||||||
Class R3 | 7 | 300 | ||||||
Class R4 | 2 | 300 | ||||||
Class R5 | 2 | 300 | ||||||
Class Y | 4,803 | ** | 300 | |||||
Net increase from capital share transactions | 58,764 | 21,642 | ||||||
Net Increase In Net Assets | 62,903 | 14,178 | ||||||
Net Assets: | ||||||||
Beginning of period | 14,178 | — | ||||||
End of period | $ | 77,081 | $ | 14,178 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 47 | $ | 119 | ||||
* | Commencement of operations. | |
† | Includes merger activity in the amount of $46,042. | |
‡ | Includes merger activity in the amount of $9,186. | |
§ | Includes merger activity in the amount of $14,610. | |
** | Includes merger activity in the amount of $3,478. |
15
October 31, 2009
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
16
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s Valuation Time. | |||
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 and asked 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
data for substantially the full term of the security. Level 2 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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 |
18
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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 may use 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 October 31, 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. | ||
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. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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 |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||
Foreign exchange contracts | Unrealized appreciation on forward foreign currency contracts | $ | 1 | Unrealized depreciation on forward foreign currency contracts | $— |
The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the year ended October 31, 2009. | ||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | 42 | $ | — | $ | 42 | ||||||||||||
Equity contracts | — | — | (372 | ) | — | — | (372 | ) | ||||||||||||||||
Total | $ | — | $ | — | $ | (372 | ) | $ | 42 | $ | — | $ | (330 | ) | ||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | (2 | ) | — | $ | (2 | ) | |||||||||||||||
Equity contracts | — | — | (4 | ) | — | — | (4 | ) | ||||||||||||||||
Total | $ | — | $ | — | $ | (4 | ) | $ | (2 | ) | $ | — | $ | (6 | ) | |||||||||
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. | Futures and Options: |
Futures and Options Transactions — The Fund is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future |
20
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 asset 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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. As of October 31, 2009, there were no outstanding futures contracts. | |||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. As of October 31, 2009, there were no outstanding purchased or written option contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
21
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings — 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, 2009 | ||||
Ordinary Income | $ | 143 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 62 | ||
Accumulated Capital Losses * | (28,282 | ) | ||
Unrealized Appreciation † | 1,556 | |||
Total Accumulated Deficit | $ | (26,664 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase accumulated undistributed net investment income by $21, increase accumulated net realized gain on investments by $54,856, and decrease paid-in-capital by $54,877. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2015 | $ | 13,365 | ||
2016 | 11,020 | |||
2017 | 3,897 | |||
Total | $ | 28,282 | ||
As a result of current or past mergers in the Fund, certain provisions in the Internal Revenue Code may limit the future utilization of capital losses. As of October 31, 2009, the Fund had $49,744 in expired capital loss carryforwards. | |||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
22
5. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | Average Daily Net Assets | Annual Fee* | |||||||
On first $500 million | 0.9500 | % | On first $500 million | 0.9000 | % | |||||
On next $500 million | 0.9000 | % | On next $500 million | 0.8750 | % | |||||
On next $4 billion | 0.8500 | % | On next $4 billion | 0.8500 | % | |||||
On next $5 billion | 0.8475 | % | On next $5 billion | 0.8475 | % | |||||
Over $10 billion | 0.8450 | % | Over $10 billion | 0.8450 | % |
* | As of November 1, 2009, HIFSCO agreed to permanently reduce its contractual management fees in the first two breakpoints by 0.05% and 0.025% of average daily net assets, respectively. The new schedule is shown above. |
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 services 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 year ended October 31, 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 | % |
Effective November 1, 2009, HIFSCO has agreed to revise the voluntary limit (which is the permanent expense limitation) on total operating expenses for the Fund, exclusive of taxes, interest, brokerage commissions, certain distribution expenses and extraordinary expenses. The new expense limitation is as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||||||||||||||||
1.50% | 2.25 | % | 2.25 | % | 1.25 | % | 1.75 | % | 1.50 | % | 1.25 | % | 1.15 | % |
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 a non-interest-bearing custody account. For the year ended October 31, 2009, these amounts are included in the Statement of Operations. |
23
Notes to Financial Statements — (continued)
October 31, 2009
(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: |
Year Ended | Year Ended | |||||||
October 31, | October 31, | |||||||
2009 | 2008 | |||||||
Class A Shares | 1.58 | % | 1.56 | %* | ||||
Class B Shares | 2.24 | 2.33 | * | |||||
Class C Shares | 2.38 | 2.34 | * | |||||
Class I Shares | 1.31 | 1.31 | * | |||||
Class R3 Shares | 1.89 | 1.90 | * | |||||
Class R4 Shares | 1.64 | 1.65 | * | |||||
Class R5 Shares | 1.39 | 1.40 | * | |||||
Class Y Shares | 1.29 | 1.30 | * |
* | 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $27 and contingent deferred sales charges of $5 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $66 for providing such services. These fees are accrued daily and paid monthly. |
24
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
6. | Affiliate Holdings: | |
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class I | 30 | |||
Class R3 | 30 | |||
Class R4 | 30 | |||
Class R5 | 30 |
7. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 136,618 | ||
Sales Proceeds Excluding U.S. Government Obligations | 83,569 |
8. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the period February 29, 2008 (commencement of operations) through October 31, 2008: |
For the Year Ended October 31, 2009 | For the Period 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 | 404 | 22 | (2,271 | ) | 5,833 | 3,988 | 1,961 | — | (14 | ) | — | 1,947 | ||||||||||||||||||||||||||||
Amount | $ | 2,934 | $ | 130 | $ | (17,553 | ) | $ | 46,042 | $ | 31,553 | $ | 19,595 | $ | — | $ | (129 | ) | $ | — | $ | 19,466 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 38 | — | (116 | ) | 1,169 | 1,091 | 34 | — | — | — | 34 | |||||||||||||||||||||||||||||
Amount | $ | 278 | $ | 1 | $ | (925 | ) | $ | 9,186 | $ | 8,540 | $ | 331 | $ | — | $ | — | $ | — | $ | 331 | |||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 74 | — | (173 | ) | 1,858 | 1,759 | 35 | — | — | — | 35 | |||||||||||||||||||||||||||||
Amount | $ | 536 | $ | 1 | $ | (1,367 | ) | $ | 14,610 | $ | 13,780 | $ | 341 | $ | — | $ | — | $ | — | $ | 341 | |||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 10 | — | — | — | 10 | 31 | — | (1 | ) | — | 30 | |||||||||||||||||||||||||||||
Amount | $ | 74 | $ | 3 | $ | — | $ | — | $ | 77 | $ | 311 | $ | — | $ | (7 | ) | $ | — | $ | 304 | |||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1 | — | — | — | 1 | 30 | — | — | — | 30 | ||||||||||||||||||||||||||||||
Amount | $ | 6 | $ | 1 | $ | — | $ | — | $ | 7 | $ | 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 | 439 | 1 | (257 | ) | 441 | 624 | 30 | — | — | — | 30 | |||||||||||||||||||||||||||||
Amount | $ | 3,253 | $ | 2 | $ | (1,930 | ) | $ | 3,478 | $ | 4,803 | $ | 300 | $ | — | $ | — | $ | — | $ | 300 |
25
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 17 | $ | 141 | |||||
For the Year Ended October 31, 2008 | — | $ | — |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
10. | Fund Mergers | |
Reorganization of certain series of The Hartford Mutual Funds, Inc. — At a special meeting of shareholders held on August 4, 2009, shareholders of The Hartford Global Communications Fund (“Target Fund #1”), The Hartford Global Financial Services Fund (“Target Fund #2”) and The Hartford Global Technology Fund (“Target Fund #3”) each approved a proposed Plan of Reorganization providing for the acquisition of all of the assets and liabilities of The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund by The Hartford Global Equity Fund (“Acquiring Fund”). | ||
Under the terms of the Plan of Reorganization, and pursuant to the approval by shareholders of The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund, the assets were acquired by The Hartford Global Equity Fund on August 28, 2009. The Hartford Global Equity Fund acquired the assets of The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund in exchange for shares in The Hartford Global Equity Fund, which were distributed pro rata to The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund to shareholders on August 28, 2009, in complete liquidation of The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund. | ||
The mergers were accomplished by tax free exchanges as detailed below: |
Acquiring | Net assets of | Net assets of | ||||||||||||||||||||||||||||||||||
Fund shares | Acquiring | Acquiring | ||||||||||||||||||||||||||||||||||
Net assets of | Net assets of | Net assets of | Target | Target | issued to the | Fund | Fund | |||||||||||||||||||||||||||||
Target Fund | Target Fund | Target Fund | Target Fund | Fund #2 | Fund #3 | Target | immediately | immediately | ||||||||||||||||||||||||||||
#1 on | #2 on | #3 on | #1 shares | shares | shares | Funds’ | before | after | ||||||||||||||||||||||||||||
Merger Date | Merger Date | Merger Date | exchanged | exchanged | exchanged | shareholders | merger | merger | ||||||||||||||||||||||||||||
Class A | $ | 12,078 | $ | 12,365 | $ | 21,599 | 2,097 | 1,490 | 4,342 | 5,833 | $ | 17,289 | $ | 63,331 | ||||||||||||||||||||||
Class B | 2,450 | 2,044 | 4,692 | 441 | 251 | 1,005 | 1,169 | 434 | 9,620 | |||||||||||||||||||||||||||
Class C | 3,067 | 3,659 | 7,884 | 550 | 451 | 1,710 | 1,858 | 594 | 15,204 | |||||||||||||||||||||||||||
Class I | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 242 | 242 | |||||||||||||||||||||||||||
Class R3 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 244 | 244 | |||||||||||||||||||||||||||
Class R4 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 239 | 239 | |||||||||||||||||||||||||||
Class R5 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 240 | 240 | |||||||||||||||||||||||||||
Class Y | 489 | 1,734 | 1,255 | 84 | 207 | 245 | 441 | 1,472 | 4,950 | |||||||||||||||||||||||||||
Total | $ | 18,084 | $ | 19,802 | $ | 35,430 | 3,172 | 2,399 | 7,302 | 9,301 | $ | 20,754 | $ | 94,070 |
26
The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund had the following unrealized appreciation (depreciation), accumulated net realized gains (losses) and capital stock as of August 28, 2009. |
Unrealized Appreciation | Accumulated Net | |||||||||||
Fund | (Depreciation) | Realized Gains (Losses) | Capital Stock | |||||||||
Target Fund #1 | $ | (3,763 | ) | $ | (7,605 | ) | $ | 29,452 | ||||
Target Fund #2 | $ | 2,248 | $ | (15,559 | ) | $ | 33,113 | |||||
Target Fund #3 | $ | 6,322 | $ | (59,889 | ) | $ | 88,997 |
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. | ||
12. | Subsequent Events: | |
Effective December 11, 2009, the Fund’s name was changed to The Hartford Global Research Fund. | ||
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
27
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.55 | $ | 0.03 | $ | — | $ | 1.50 | $ | 1.53 | $ | (0.07 | ) | $ | — | $ | — | $ | (0.07 | ) | $ | 1.46 | $ | 8.01 | ||||||||||||||||||||
B | 6.51 | (0.05 | ) | — | 1.53 | 1.48 | (0.02 | ) | — | — | (0.02 | ) | 1.46 | 7.97 | ||||||||||||||||||||||||||||||
C | 6.51 | (0.06 | ) | — | 1.54 | 1.48 | (0.02 | ) | — | — | (0.02 | ) | 1.46 | 7.97 | ||||||||||||||||||||||||||||||
I | 6.56 | 0.07 | — | 1.47 | 1.54 | (0.08 | ) | — | — | (0.08 | ) | 1.46 | 8.02 | |||||||||||||||||||||||||||||||
R3 | 6.53 | 0.03 | — | 1.48 | 1.51 | (0.04 | ) | — | — | (0.04 | ) | 1.47 | 8.00 | |||||||||||||||||||||||||||||||
R4 | 6.54 | 0.04 | — | 1.49 | 1.53 | (0.06 | ) | — | — | (0.06 | ) | 1.47 | 8.01 | |||||||||||||||||||||||||||||||
R5 | 6.55 | 0.07 | — | 1.48 | 1.55 | (0.08 | ) | — | — | (0.08 | ) | 1.47 | 8.02 | |||||||||||||||||||||||||||||||
Y | 6.56 | 0.02 | — | 1.52 | 1.54 | (0.09 | ) | — | — | (0.09 | ) | 1.45 | 8.01 | |||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B(g) | 10.00 | — | — | (3.49 | ) | (3.49 | ) | — | — | — | — | (3.49 | ) | 6.51 | ||||||||||||||||||||||||||||||
C(g) | 10.00 | — | — | (3.49 | ) | (3.49 | ) | — | — | — | — | (3.49 | ) | 6.51 | ||||||||||||||||||||||||||||||
I(g) | 10.00 | 0.07 | — | (3.51 | ) | (3.44 | ) | — | — | — | — | (3.44 | ) | 6.56 | ||||||||||||||||||||||||||||||
R3(g) | 10.00 | 0.03 | — | (3.50 | ) | (3.47 | ) | — | — | — | — | (3.47 | ) | 6.53 | ||||||||||||||||||||||||||||||
R4(g) | 10.00 | 0.04 | — | (3.50 | ) | (3.46 | ) | — | — | — | — | (3.46 | ) | 6.54 | ||||||||||||||||||||||||||||||
R5(g) | 10.00 | 0.06 | — | (3.51 | ) | (3.45 | ) | — | — | — | — | (3.45 | ) | 6.55 | ||||||||||||||||||||||||||||||
Y(g) | 10.00 | 0.07 | — | (3.51 | ) | (3.44 | ) | — | — | — | — | (3.44 | ) | 6.56 |
(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) | During the year ended October 31, 2009, The Hartford Global Equity Fund incurred $50.9 million in sales associated with the transition of assets from The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund, which merged into The Fund on August 28, 2009. These sales are excluded from the portfolio turnover calculation. | |
(g) | Commenced operations on February 29, 2008. | |
(h) | Not annualized. | |
(i) | Annualized. |
28
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||
23.65% | $ | 47,527 | 2.19 | % | 1.59 | % | 1.59 | % | 0.44 | % | 217 | %(f) | ||||||||||||||||
22.89 | 8,964 | 2.83 | 2.24 | 2.24 | (0.82 | ) | — | |||||||||||||||||||||
22.91 | 14,297 | 2.67 | 2.39 | 2.39 | (0.99 | ) | — | |||||||||||||||||||||
23.97 | 317 | 1.91 | 1.32 | 1.32 | 1.00 | — | ||||||||||||||||||||||
23.36 | 248 | 2.62 | 1.90 | 1.90 | 0.52 | — | ||||||||||||||||||||||
23.70 | 243 | 2.31 | 1.65 | 1.65 | 0.78 | — | ||||||||||||||||||||||
24.05 | 244 | 2.01 | 1.40 | 1.40 | 1.03 | — | ||||||||||||||||||||||
23.85 | 5,241 | 1.51 | 1.30 | 1.30 | 0.26 | — | ||||||||||||||||||||||
(34.50) (h) | 12,746 | 1.92 | (i) | 1.56 | (i) | 1.56 | (i) | 0.78 | (i) | 56 | ||||||||||||||||||
(34.90) (h) | 223 | 2.70 | (i) | 2.34 | (i) | 2.34 | (i) | 0.03 | (i) | — | ||||||||||||||||||
(34.90) (h) | 225 | 2.71 | (i) | 2.34 | (i) | 2.34 | (i) | 0.02 | (i) | — | ||||||||||||||||||
(34.40) (h) | 199 | 1.67 | (i) | 1.31 | (i) | 1.31 | (i) | 1.06 | (i) | — | ||||||||||||||||||
(34.70) (h) | 196 | 2.36 | (i) | 1.90 | (i) | 1.90 | (i) | 0.47 | (i) | — | ||||||||||||||||||
(34.60) (h) | 196 | 2.06 | (i) | 1.65 | (i) | 1.65 | (i) | 0.72 | (i) | — | ||||||||||||||||||
(34.50) (h) | 196 | 1.76 | (i) | 1.40 | (i) | 1.40 | (i) | 0.97 | (i) | — | ||||||||||||||||||
(34.40) (h) | 197 | 1.66 | (i) | 1.30 | (i) | 1.30 | (i) | 1.07 | (i) | — |
29
The Hartford Mutual Funds, Inc.
December 15, 2009
30
31
Directors and Officers (Unaudited) — (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
32
33
DRD* | 85.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.066 | N/A | N/A | 0.066 | ||||||||||||
Class B | 0.023 | N/A | N/A | 0.023 | ||||||||||||
Class C | 0.024 | N/A | N/A | 0.024 | ||||||||||||
Class I | 0.084 | N/A | N/A | 0.084 | ||||||||||||
Class R3 | 0.041 | N/A | N/A | 0.041 | ||||||||||||
Class R4 | 0.060 | N/A | N/A | 0.060 | ||||||||||||
Class R5 | 0.078 | N/A | N/A | 0.078 | ||||||||||||
Class Y | 0.085 | N/A | N/A | 0.085 |
34
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,259.40 | $ | 9.57 | $ | 1,000.00 | $ | 1,016.74 | $ | 8.54 | 1.68 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,255.10 | $ | 12.68 | $ | 1,000.00 | $ | 1,013.96 | $ | 11.32 | 2.23 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,255.10 | $ | 13.59 | $ | 1,000.00 | $ | 1,013.16 | $ | 12.13 | 2.39 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,261.00 | $ | 8.38 | $ | 1,000.00 | $ | 1,017.80 | $ | 7.48 | 1.47 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,257.90 | $ | 10.81 | $ | 1,000.00 | $ | 1,015.63 | $ | 9.65 | 1.90 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,259.40 | $ | 9.40 | $ | 1,000.00 | $ | 1,016.89 | $ | 8.39 | 1.65 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,261.00 | $ | 7.98 | $ | 1,000.00 | $ | 1,018.15 | $ | 7.12 | 1.40 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,259.40 | $ | 7.40 | $ | 1,000.00 | $ | 1,018.65 | $ | 6.61 | 1.30 | 184 | 365 |
35
Fund Name | For | Against | Abstain | Uninstructed | ||||||||||||
The Hartford Global Communications Fund | 1,492,303.83 | 102,080.21 | 105,896.73 | 131,670.00 |
Fund Name | For | Against | Abstain | Uninstructed | ||||||||||||
The Hartford Global Financial Services Fund | 1,190,245.84 | 31,062.14 | 54,800.80 | 212,089.00 |
Fund Name | For | Against | Abstain | Uninstructed | ||||||||||||
The Hartford Global Technology Fund | 3,601,106.71 | 228,802.24 | 218,583.08 | 250,102.00 |
36
37
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
38
39
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
40
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
20 | ||||
22 | ||||
23 | ||||
25 | ||||
25 | ||||
26 | ||||
27 | ||||
28 |
(subadvised by Wellington Management Company, LLP) | Investment objective — Seeks growth of captial. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | 10 | ||||||||||
Year | Year | Year | ||||||||||
Global Growth A# | 19.33 | % | -1.80 | % | 0.21 | % | ||||||
Global Growth A## | 12.77 | % | -2.90 | % | -0.36 | % | ||||||
Global Growth B# | 18.88 | % | -2.43 | % | NA | * | ||||||
Global Growth B## | 13.88 | % | -2.75 | % | NA | * | ||||||
Global Growth C# | 18.29 | % | -2.55 | % | -0.50 | % | ||||||
Global Growth C## | 17.29 | % | -2.55 | % | -0.50 | % | ||||||
Global Growth R3# | 18.87 | % | -1.74 | % | 0.53 | % | ||||||
Global Growth R4# | 19.07 | % | -1.64 | % | 0.58 | % | ||||||
Global Growth R5# | 19.46 | % | -1.43 | % | 0.69 | % | ||||||
Global Growth Y# | 19.57 | % | -1.34 | % | 0.73 | % | ||||||
MSCI World Growth Index | 19.75 | % | 3.30 | % | -1.27 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year 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) | Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||||
Matthew D. Hudson, CFA | Jean-Marc Berteaux | Andrew S. Offit, CPA | ||
Vice President | Senior Vice President, Partner | Senior Vice President, Partner |
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 2.4 | % | ||
Banks (Financials) | 5.2 | |||
Capital Goods (Industrials) | 11.5 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 2.2 | |||
Consumer Services (Consumer Discretionary) | 2.2 | |||
Diversified Financials (Financials) | 6.4 | |||
Energy (Energy) | 9.3 | |||
Food & Staples Retailing (Consumer Staples) | 1.4 | |||
Food, Beverage & Tobacco (Consumer Staples) | 3.2 | |||
Household & Personal Products (Consumer Staples) | 1.5 | |||
Insurance (Financials) | 1.5 | |||
Materials (Materials) | 8.1 | |||
Media (Consumer Discretionary) | 1.0 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 6.3 | |||
Real Estate (Financials) | 1.0 | |||
Retailing (Consumer Discretionary) | 9.0 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 3.2 | |||
Software & Services (Information Technology) | 8.1 | |||
Technology Hardware & Equipment (Information Technology) | 10.9 | |||
Telecommunication Services (Services) | 2.4 | |||
Short-Term Investments | 2.6 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
Country | Net Assets | |||
Brazil | 2.4 | % | ||
Canada | 2.7 | |||
China | 0.7 | |||
Denmark | 1.6 | |||
France | 0.9 | |||
Germany | 5.4 | |||
Hong Kong | 4.1 | |||
Israel | 1.4 | |||
Japan | 6.8 | |||
Spain | 2.1 | |||
Switzerland | 6.1 | |||
Taiwan | 1.0 | |||
United Kingdom | 11.5 | |||
United States | 50.1 | |||
Short-Term Investments | 2.6 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 96.8% | ||||||||
Automobiles & Components — 2.4% | ||||||||
123 | Daimler AG. | $ | 5,989 | |||||
666 | Nissan Motor Co., Ltd. | 4,819 | ||||||
10,808 | ||||||||
Banks — 5.2% | ||||||||
364 | Banco Santander Central Hispano S.A. | 5,855 | ||||||
2,375 | BOC Hong Kong Holdings Ltd. | 5,467 | ||||||
265 | Itau Unibanco Banco Multiplo S.A. ADR | 5,063 | ||||||
298 | Standard Chartered plc. | 7,300 | ||||||
23,685 | ||||||||
Capital Goods — 11.5% | ||||||||
72 | Danaher Corp. | 4,926 | ||||||
142 | Illinois Tool Works, Inc. | 6,498 | ||||||
185 | Ingersoll-Rand plc. | 5,847 | ||||||
88 | Parker-Hannifin Corp. | 4,666 | ||||||
66 | Precision Castparts Corp. | 6,286 | ||||||
82 | Siemens AG. | 7,381 | ||||||
39 | SMC Corp. | 4,465 | ||||||
207 | Sunpower Corp. • | 5,136 | ||||||
103 | Vestas Wind Systems A/S • | 7,257 | ||||||
52,462 | ||||||||
Consumer Durables & Apparel — 2.2% | ||||||||
108 | Adidas-Salomon AG. | 5,009 | ||||||
146 | Coach, Inc. | 4,820 | ||||||
9,829 | ||||||||
Consumer Services — 2.2% | ||||||||
646 | MGM Mirage, Inc. • | 5,986 | ||||||
3,019 | Wynn Macau Ltd. • | 3,883 | ||||||
9,869 | ||||||||
Diversified Financials — 6.4% | ||||||||
576 | Bank of America Corp. | 8,392 | ||||||
26 | Goldman Sachs Group, Inc. | 4,356 | ||||||
131 | JP Morgan Chase & Co. | 5,476 | ||||||
130 | Julius Baer Group Ltd. | 4,881 | ||||||
383 | UBS AG | 6,387 | ||||||
29,492 | ||||||||
Energy — 9.3% | ||||||||
314 | BG Group plc. | 5,398 | ||||||
92 | Canadian Natural Resources Ltd. | 5,938 | ||||||
61 | EOG Resources, Inc. | 4,996 | ||||||
113 | Hess Corp. | 6,180 | ||||||
145 | National Oilwell Varco, Inc. • | 5,956 | ||||||
126 | Petroleo Brasileiro S.A. ADR | 5,843 | ||||||
131 | Schlumberger Ltd. | 8,129 | ||||||
42,440 | ||||||||
Food & Staples Retailing — 1.4% | ||||||||
119 | Metro AG | 6,582 | ||||||
Food, Beverage & Tobacco — 3.2% | ||||||||
218 | British American Tobacco plc. | 6,961 | ||||||
166 | Nestle S.A. | 7,741 | ||||||
14,702 | ||||||||
Household & Personal Products — 1.5% | ||||||||
138 | Reckitt Benckiser Group plc. | 6,831 | ||||||
Insurance — 1.5% | ||||||||
357 | Ping An Insurance (Group) Co. | 3,129 | ||||||
81 | Prudential Financial, Inc. | 3,654 | ||||||
6,783 | ||||||||
Materials — 8.1% | ||||||||
159 | Anglo American plc • | 5,746 | ||||||
183 | Barrick Gold Corp. | 6,568 | ||||||
295 | BHP Billiton plc. | 7,960 | ||||||
53 | Praxair, Inc. | 4,242 | ||||||
89 | Shin-Etsu Chemical Co., Ltd. | 4,725 | ||||||
535 | Xstrata plc. | 7,706 | ||||||
36,947 | ||||||||
Media — 1.0% | ||||||||
486 | WPP plc. | 4,351 | ||||||
Pharmaceuticals, Biotechnology & Life Sciences — 6.3% | ||||||||
171 | Amgen, Inc. • | 9,166 | ||||||
230 | Daiichi Sankyo Co., Ltd. | 4,488 | ||||||
55 | Roche Holding AG | 8,859 | ||||||
128 | Teva Pharmaceutical Industries Ltd. ADR | 6,436 | ||||||
28,949 | ||||||||
Real Estate — 1.0% | ||||||||
1,257 | Hang Lung Properties Ltd. | 4,750 | ||||||
Retailing — 9.0% | ||||||||
63 | Amazon.com, Inc. • | 7,438 | ||||||
154 | Best Buy Co., Inc. | 5,868 | ||||||
254 | Gap, Inc. | 5,423 | ||||||
62 | Industria de Diseno Textil S.A. | 3,658 | ||||||
67 | Kohl’s Corp. • | 3,805 | ||||||
1,120 | Li & Fung Ltd. | 4,658 | ||||||
290 | Lowe’s Co., Inc. | 5,673 | ||||||
155 | Urban Outfitters, Inc. • | 4,879 | ||||||
41,402 | ||||||||
Semiconductors & Semiconductor Equipment — 3.2% | ||||||||
218 | Altera Corp. | 4,314 | ||||||
499 | NVIDIA Corp. • | 5,968 | ||||||
480 | Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 4,577 | ||||||
14,859 | ||||||||
Software & Services — 8.1% | ||||||||
132 | Accenture plc. | 4,880 | ||||||
18 | Google, Inc. • | 9,661 | ||||||
498 | Oracle Corp. | 10,499 | ||||||
77 | Visa, Inc. | 5,796 | ||||||
356 | Western Union Co. | 6,461 | ||||||
37,297 | ||||||||
Technology Hardware & Equipment — 10.9% | ||||||||
1,163 | Alcatel S.A. | 4,356 | ||||||
54 | Apple, Inc. • | 10,122 | ||||||
545 | Cisco Systems, Inc. • | 12,449 | ||||||
102 | Hewlett-Packard Co. | 4,831 | ||||||
208 | NetApp, Inc. • | 5,624 | ||||||
161 | Qualcomm, Inc. | 6,679 | ||||||
1,041 | Toshiba Corp. | 5,950 | ||||||
50,011 | ||||||||
4
Shares or Principal Amount | Market Value ╪ | |||||||||||
Telecommunication Services — 2.4% | ||||||||||||
132 | American Tower Corp. Class A • | 4,864 | ||||||||||
253 | Softbank Corp. | 5,966 | ||||||||||
10,830 | ||||||||||||
Total common stocks (cost $381,488) | $ | 442,879 | ||||||||||
Total long-term investments (cost $381,488) | $ | 442,879 | ||||||||||
SHORT-TERM INVESTMENTS - 2.6% | ||||||||||||
Repurchase Agreements - 2.6% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $479, collateralized by GNMA 5.00%, 2039, value of $489) | ||||||||||||
$ | 479 | 0.08%, 10/30/2009 | $ | 479 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $2,809, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $2,865) | ||||||||||||
2,808 | 0.08%, 10/30/2009 | 2,808 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $3,129, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $3,191) | ||||||||||||
3,129 | 0.08%, 10/30/2009 | 3,129 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $32, collateralized by U.S. Treasury Note 2.75%, 2013, value of $32) | ||||||||||||
32 | 0.05%, 10/30/2009 | 32 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $5,421, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $5,529) | ||||||||||||
5,421 | 0.07%, 10/30/2009 | 5,421 | ||||||||||
11,869 | ||||||||||||
Total short-term investments (cost $11,869) | $ | 11,869 | ||||||||||
Total investments (cost $393,357) ▲ | 99.4 | % | $ | 454,748 | ||||||||
Other assets and liabilities | 0.6 | % | 2,895 | |||||||||
Total net assets | 100.0 | % | $ | 457,643 | ||||||||
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 46.7% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $397,220 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 73,733 | ||
Unrealized Depreciation | (16,205 | ) | ||
Net Unrealized Appreciation | $ | 57,528 | ||
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
5
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Automobiles & Components | $ | 10,808 | $ | — | $ | 10,808 | $ | — | ||||||||
Banks | 23,685 | 5,063 | 18,622 | — | ||||||||||||
Capital Goods | 52,462 | 33,359 | 19,103 | — | ||||||||||||
Consumer Durables & Apparel | 9,829 | 4,820 | 5,009 | — | ||||||||||||
Consumer Services | 9,869 | 9,869 | — | — | ||||||||||||
Diversified Financials | 29,492 | 23,105 | 6,387 | — | ||||||||||||
Energy | 42,440 | 37,042 | 5,398 | — | ||||||||||||
Food & Staples Retailing | 6,582 | — | 6,582 | — | ||||||||||||
Food, Beverage & Tobacco | 14,702 | — | 14,702 | — | ||||||||||||
Household & Personal Products | 6,831 | — | 6,831 | — | ||||||||||||
Insurance | 6,783 | 3,654 | 3,129 | — | ||||||||||||
Materials | 36,947 | 10,810 | 26,137 | — | ||||||||||||
Media | 4,351 | — | 4,351 | — | ||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences | 28,949 | 15,602 | 13,347 | — | ||||||||||||
Real Estate | 4,750 | — | 4,750 | — | ||||||||||||
Retailing | 41,402 | 33,086 | 8,316 | — | ||||||||||||
Semiconductors & Semiconductor Equipment | 14,859 | 14,859 | — | — | ||||||||||||
Software & Services | 37,297 | 37,297 | — | — | ||||||||||||
Technology Hardware & Equipment | 50,011 | 39,705 | 10,306 | — | ||||||||||||
Telecommunication Services | 10,830 | 4,864 | 5,966 | — | ||||||||||||
Total | 442,879 | 273,135 | 169,744 | — | ||||||||||||
Short-Term Investments | 11,869 | — | 11,869 | — | ||||||||||||
Total | $ | 454,748 | $ | 273,135 | $ | 181,613 | $ | — | ||||||||
6
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $393,357) | $ | 454,748 | ||
Cash | 7 | |||
Receivables: | ||||
Investment securities sold | 3,323 | |||
Fund shares sold | 408 | |||
Dividends and interest | 610 | |||
Other assets | 91 | |||
Total assets | 459,187 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 820 | |||
Fund shares redeemed | 465 | |||
Investment management fees | 66 | |||
Distribution fees | 17 | |||
Accrued expenses | 176 | |||
Total liabilities | 1,544 | |||
Net assets | $ | 457,643 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 564,335 | |||
Accumulated undistributed net investment income | 1,511 | |||
Accumulated net realized loss on investments and foreign currency transactions | (169,611 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 61,408 | |||
Net assets | $ | 457,643 | ||
Shares authorized | 450,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 12.53/$13.26 | ||
Shares outstanding | 18,750 | |||
Net assets | $ | 234,971 | ||
Class B: Net asset value per share | $ | 11.46 | ||
Shares outstanding | 1,600 | |||
Net assets | $ | 18,333 | ||
Class C: Net asset value per share | $ | 11.45 | ||
Shares outstanding | 2,363 | |||
Net assets | $ | 27,064 | ||
Class R3: Net asset value per share | $ | 13.04 | ||
Shares outstanding | 9 | |||
Net assets | $ | 113 | ||
Class R4: Net asset value per share | $ | 13.11 | ||
Shares outstanding | 4 | |||
Net assets | $ | 59 | ||
Class R5: Net asset value per share | $ | 13.26 | ||
Shares outstanding | 1 | |||
Net assets | $ | 7 | ||
Class Y: Net asset value per share | $ | 13.32 | ||
Shares outstanding | 13,296 | |||
Net assets | $ | 177,096 | ||
7
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 6,501 | ||
Interest | 15 | |||
Securities lending | 19 | |||
Less: Foreign tax withheld | (561 | ) | ||
Total investment income | 5,974 | |||
Expenses: | ||||
Investment management fees | 3,355 | |||
Administrative services fees | — | |||
Transfer agent fees | 1,582 | |||
Distribution fees | ||||
Class A | 490 | |||
Class B | 187 | |||
Class C | 258 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 25 | |||
Accounting services fees | 63 | |||
Registration and filing fees | 90 | |||
Board of Directors’ fees | 12 | |||
Audit fees | 18 | |||
Other expenses | 126 | |||
Total expenses (before waivers and fees paid indirectly) | 6,206 | |||
Expense waivers | (867 | ) | ||
Transfer agent fee waivers | (859 | ) | ||
Commission recapture | (22 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (1,748 | ) | ||
Total expenses, net | 4,458 | |||
Net Investment Income | 1,516 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (118,596 | ) | ||
Net realized loss on forward foreign currency contracts | (264 | ) | ||
Net realized gain on other foreign currency transactions | 266 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (118,594 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 188,075 | |||
Net unrealized appreciation of forward foreign currency contracts | 30 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (19 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 188,086 | |||
Net Gain on Investments and Foreign Currency Transactions | 69,492 | |||
Net Increase in Net Assets Resulting from Operations | $ | 71,008 | ||
8
(000’s Omitted)
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | 1,516 | $ | (1,079 | ) | |||
Net realized loss on investments and foreign currency transactions | (118,594 | ) | (50,551 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 188,086 | (377,759 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 71,008 | (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 | (10,455 | ) | 22,809 | |||||
Class B | (7,898 | ) | (13,917 | ) | ||||
Class C | (7,155 | ) | 235 | |||||
Class R3 | 92 | 9 | ||||||
Class R4 | 37 | 17 | ||||||
Class R5 | (5 | ) | 11 | |||||
Class Y | 9,459 | 69,486 | ||||||
Net increase (decrease) from capital share transactions | (15,925 | ) | 78,650 | |||||
Net Increase (Decrease) In Net Assets | 55,083 | (440,616 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 402,560 | 843,176 | ||||||
End of period | $ | 457,643 | $ | 402,560 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 1,511 | $ | 15 | ||||
9
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
10
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management |
11
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 |
12
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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had no outstanding forward foreign currency contracts as of October 31, 2009. | |||
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 annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 October 31, 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 October 31, 2009, the Fund had no outstanding when-issued or delayed delivery securities. |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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) | Additional Derivative Instrument(s) Information | ||
The volume of derivative activity was minimal during the year ended October 31, 2009. | |||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | (264 | ) | $ | — | $ | (264 | ) | ||||||||||
Total | $ | — | $ | — | $ | — | $ | (264 | ) | $ | — | $ | (264 | ) | ||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | 30 | — | $ | 30 | |||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | 30 | $ | — | $ | 30 | ||||||||||||
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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
14
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | — | $ | 18,484 | ||||
Long-Term Capital Gains * | — | 71,393 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 1,511 | ||
Accumulated Capital Losses * | (165,748 | ) | ||
Unrealized Appreciation † | 57,545 | |||
Total Accumulated Deficit | $ | (106,692 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $20, increase accumulated net realized gain on investments by $21, and decrease paid-in-capital by $1. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 45,031 | ||
2017 | 120,717 | |||
Total | $ | 165,748 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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 | % |
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 a non-interest-bearing custody account. For the year ended October 31, 2009, these amounts are included in the Statement of Operations. |
16
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.13 | % | 1.43 | % | 1.47 | % | 1.45 | % | 1.36 | % | ||||||||||
Class B Shares | 1.56 | 2.01 | 2.18 | 2.15 | 2.23 | |||||||||||||||
Class C Shares | 2.00 | 2.16 | 2.14 | 2.18 | 2.13 | |||||||||||||||
Class R3 Shares | 1.72 | 1.72 | 1.65 | * | ||||||||||||||||
Class R4 Shares | 1.36 | 1.43 | 1.34 | * | ||||||||||||||||
Class R5 Shares | 1.05 | 1.05 | 1.05 | * | ||||||||||||||||
Class Y Shares | 0.93 | 0.90 | 0.89 | 0.91 | 0.85 |
* | 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $401 and contingent deferred sales charges of $29 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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. | |||
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $644 for providing such services. These fees are accrued daily and paid monthly. |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. 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 | Affiliate for the | |||||||
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 October 31, 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 year ended October 31, 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 | $ | 316,130 | ||
Sales Proceeds Excluding U.S. Government Obligations | 330,123 |
18
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 3,670 | — | (5,198 | ) | — | (1,528 | ) | 2,818 | 2,438 | (4,703 | ) | — | 553 | |||||||||||||||||||||||||||
Amount | $ | 43,335 | $ | — | $ | (53,790 | ) | $ | — | $ | (10,455 | ) | $ | 51,785 | $ | 50,714 | $ | (79,690 | ) | $ | — | $ | 22,809 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 131 | — | (981 | ) | — | (850 | ) | 198 | 457 | (1,596 | ) | — | (941 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,276 | $ | — | $ | (9,174 | ) | $ | — | $ | (7,898 | ) | $ | 3,339 | $ | 8,763 | $ | (26,019 | ) | $ | — | $ | (13,917 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 215 | — | (985 | ) | — | (770 | ) | 221 | 419 | (744 | ) | — | (104 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,985 | $ | — | $ | (9,140 | ) | $ | — | $ | (7,155 | ) | $ | 3,869 | $ | 8,096 | $ | (11,730 | ) | $ | — | $ | 235 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 9 | — | (1 | ) | — | 8 | — | — | — | — | — | |||||||||||||||||||||||||||||
Amount | $ | 108 | $ | — | $ | (16 | ) | $ | — | $ | 92 | $ | 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 | 2,967 | — | (1,852 | ) | — | 1,115 | 4,002 | 907 | (210 | ) | — | 4,699 | ||||||||||||||||||||||||||||
Amount | $ | 30,381 | $ | — | $ | (20,922 | ) | $ | — | $ | 9,459 | $ | 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) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 345 | $ | 3,533 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. | ||
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
19
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 10.50 | $ | 0.04 | $ | — | $ | 1.99 | $ | 2.03 | $ | — | $ | — | $ | — | $ | — | $ | 2.03 | $ | 12.53 | ||||||||||||||||||||||
B | 9.64 | — | — | 1.82 | 1.82 | — | — | — | — | 1.82 | 11.46 | |||||||||||||||||||||||||||||||||
C | 9.68 | (0.05 | ) | — | 1.82 | 1.77 | — | — | — | — | 1.77 | 11.45 | ||||||||||||||||||||||||||||||||
R3 | 10.97 | (0.02 | ) | — | 2.09 | 2.07 | — | — | — | — | 2.07 | 13.04 | ||||||||||||||||||||||||||||||||
R4 | 11.01 | 0.01 | — | 2.09 | 2.10 | — | — | — | — | 2.10 | 13.11 | |||||||||||||||||||||||||||||||||
R5 | 11.10 | 0.05 | — | 2.11 | 2.16 | — | — | — | — | 2.16 | 13.26 | |||||||||||||||||||||||||||||||||
Y | 11.14 | 0.07 | — | 2.11 | 2.18 | — | — | — | — | 2.18 | 13.32 | |||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 23.27 | (0.14 | ) | — | (10.83 | ) | (10.97 | ) | — | (2.66 | ) | — | (2.66 | ) | (13.63 | ) | 9.64 | |||||||||||||||||||||||||||
C | 23.40 | (0.16 | ) | — | (10.90 | ) | (11.06 | ) | — | (2.66 | ) | — | (2.66 | ) | (13.72 | ) | 9.68 | |||||||||||||||||||||||||||
R3 | 26.02 | (0.08 | ) | — | (12.31 | ) | (12.39 | ) | — | (2.66 | ) | — | (2.66 | ) | (15.05 | ) | 10.97 | |||||||||||||||||||||||||||
R4 | 26.09 | (0.05 | ) | — | (12.37 | ) | (12.42 | ) | — | (2.66 | ) | — | (2.66 | ) | (15.08 | ) | 11.01 | |||||||||||||||||||||||||||
R5 | 26.15 | 0.05 | — | (12.44 | ) | (12.39 | ) | — | (2.66 | ) | — | (2.66 | ) | (15.05 | ) | 11.10 | ||||||||||||||||||||||||||||
Y | 26.19 | 0.07 | — | (12.46 | ) | (12.39 | ) | — | (2.66 | ) | — | (2.66 | ) | (15.05 | ) | 11.14 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 18.23 | (0.32 | ) | 0.06 | 6.28 | 6.02 | — | (0.98 | ) | — | (0.98 | ) | 5.04 | 23.27 | ||||||||||||||||||||||||||||||
C | 18.31 | (0.28 | ) | 0.05 | 6.30 | 6.07 | — | (0.98 | ) | — | (0.98 | ) | 5.09 | 23.40 | ||||||||||||||||||||||||||||||
R3(g) | 20.00 | (0.14 | ) | — | 6.16 | 6.02 | — | — | — | — | 6.02 | 26.02 | ||||||||||||||||||||||||||||||||
R4(g) | 20.00 | (0.09 | ) | — | 6.18 | 6.09 | — | — | — | — | 6.09 | 26.09 | ||||||||||||||||||||||||||||||||
R5(g) | 20.00 | (0.03 | ) | — | 6.18 | 6.15 | — | — | — | — | 6.15 | 26.15 | ||||||||||||||||||||||||||||||||
Y | 20.14 | — | 0.06 | 6.97 | 7.03 | — | (0.98 | ) | — | (0.98 | ) | 6.05 | 26.19 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||
B | 15.93 | (0.17 | ) | — | 2.66 | 2.49 | — | (0.19 | ) | — | (0.19 | ) | 2.30 | 18.23 | ||||||||||||||||||||||||||||||
C | 16.01 | (0.17 | ) | — | 2.66 | 2.49 | — | (0.19 | ) | — | (0.19 | ) | 2.30 | 18.31 | ||||||||||||||||||||||||||||||
Y | 17.46 | 0.06 | — | 2.91 | 2.97 | (0.10 | ) | (0.19 | ) | — | (0.29 | ) | 2.68 | 20.14 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 16.49 | 0.08 | — | 0.23 | 0.31 | — | — | — | — | 0.31 | 16.80 | |||||||||||||||||||||||||||||||||
B | 15.77 | (0.08 | ) | — | 0.24 | 0.16 | — | — | — | — | 0.16 | 15.93 | ||||||||||||||||||||||||||||||||
C | 15.84 | (0.06 | ) | — | 0.23 | 0.17 | — | — | — | — | 0.17 | 16.01 | ||||||||||||||||||||||||||||||||
Y | 17.06 | 0.13 | — | 0.27 | 0.40 | — | — | — | — | 0.40 | 17.46 |
(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) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Not annualized. | |
(i) | Annualized. |
20
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||
19.33 | % | $ | 234,971 | 1.83 | % | 1.13 | % | 1.13 | % | 0.38 | % | 82 | % | |||||||||||||||
18.88 | 18,333 | 2.90 | 1.57 | 1.57 | (0.05 | ) | — | |||||||||||||||||||||
18.29 | 27,064 | 2.45 | 2.01 | 2.01 | (0.49 | ) | — | |||||||||||||||||||||
18.87 | 113 | 1.82 | 1.73 | 1.73 | (0.41 | ) | — | |||||||||||||||||||||
19.07 | 59 | 1.37 | 1.37 | 1.37 | 0.16 | — | ||||||||||||||||||||||
19.46 | 7 | 1.05 | 1.05 | 1.05 | 0.46 | — | ||||||||||||||||||||||
19.57 | 177,096 | 0.94 | 0.94 | 0.94 | 0.59 | — | ||||||||||||||||||||||
(52.57 | ) | 212,910 | 1.49 | 1.43 | 1.43 | (0.18 | ) | 82 | ||||||||||||||||||||
(52.83 | ) | 23,614 | 2.42 | 2.01 | 2.01 | (0.79 | ) | — | ||||||||||||||||||||
(52.94 | ) | 30,334 | 2.16 | 2.16 | 2.16 | (0.92 | ) | — | ||||||||||||||||||||
(52.69 | ) | 10 | 1.88 | 1.73 | 1.73 | (0.42 | ) | — | ||||||||||||||||||||
(52.66 | ) | 7 | 1.58 | 1.43 | 1.43 | (0.57 | ) | — | ||||||||||||||||||||
(52.40 | ) | 12 | 1.06 | 1.06 | 1.06 | 0.26 | — | |||||||||||||||||||||
(52.31 | ) | 135,673 | 0.90 | 0.90 | 0.90 | 0.36 | — | |||||||||||||||||||||
35.85 | (f) | 492,466 | 1.48 | 1.48 | 1.48 | (0.62 | ) | 85 | ||||||||||||||||||||
34.81 | (f) | 78,931 | 2.40 | 2.19 | 2.19 | (1.33 | ) | — | ||||||||||||||||||||
34.94 | (f) | 75,742 | 2.15 | 2.15 | 2.15 | (1.29 | ) | — | ||||||||||||||||||||
30.10 | (h) | 13 | 1.65 | (i) | 1.65 | (i) | 1.65 | (i) | (0.78 | ) (i) | — | |||||||||||||||||
30.45 | (h) | 13 | 1.34 | (i) | 1.34 | (i) | 1.34 | (i) | (0.47 | ) (i) | — | |||||||||||||||||
30.75 | (h) | 13 | 1.05 | (i) | 1.05 | (i) | 1.05 | (i) | (0.17 | ) (i) | — | |||||||||||||||||
36.61 | (f) | 195,998 | 0.89 | 0.89 | 0.89 | (0.01 | ) | — | ||||||||||||||||||||
16.58 | 417,840 | 1.53 | 1.48 | 1.48 | (0.25 | ) | 125 | |||||||||||||||||||||
15.80 | 74,805 | 2.44 | 2.18 | 2.18 | (0.95 | ) | — | |||||||||||||||||||||
15.72 | 66,121 | 2.20 | 2.20 | 2.20 | (0.98 | ) | — | |||||||||||||||||||||
17.25 | 169,270 | 0.93 | 0.93 | 0.93 | 0.31 | — | ||||||||||||||||||||||
1.88 | 419,648 | 1.58 | 1.48 | 1.48 | 0.41 | 270 | ||||||||||||||||||||||
1.02 | 78,986 | 2.51 | 2.35 | 2.35 | (0.45 | ) | — | |||||||||||||||||||||
1.07 | 71,623 | 2.25 | 2.25 | 2.25 | (0.34 | ) | — | |||||||||||||||||||||
2.34 | 83,896 | 0.97 | 0.97 | 0.97 | 0.87 | — |
21
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
22
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
23
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
Mr. Arena serves as Executive Vice President of Hartford Life. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 — 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009. |
24
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
25
26
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,214.10 | $ | 6.64 | $ | 1,000.00 | $ | 1,019.21 | $ | 6.06 | 1.19 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,212.70 | $ | 9.31 | $ | 1,000.00 | $ | 1,016.79 | $ | 8.49 | 1.67 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,209.10 | $ | 11.41 | $ | 1,000.00 | $ | 1,014.87 | $ | 10.41 | 2.05 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,211.90 | $ | 10.04 | $ | 1,000.00 | $ | 1,016.13 | $ | 9.15 | 1.80 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,213.90 | $ | 7.42 | $ | 1,000.00 | $ | 1,018.50 | $ | 6.77 | 1.33 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,215.40 | $ | 5.75 | $ | 1,000.00 | $ | 1,020.01 | $ | 5.24 | 1.03 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,216.40 | $ | 5.08 | $ | 1,000.00 | $ | 1,020.62 | $ | 4.63 | 0.91 | 184 | 365 |
27
28
29
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
30
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
20 | ||||
22 | ||||
23 | ||||
25 | ||||
25 | ||||
26 | ||||
27 | ||||
28 |
(subadvised by Wellington Management Company, LLP) | Investment objective — Seeks long-term capital appreciation. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
Global Health A# | 8.48 | % | 2.81 | % | 6.93 | % | ||||||
Global Health A## | 2.52 | % | 1.65 | % | 6.29 | % | ||||||
Global Health B# | 7.95 | % | 2.05 | % | NA | * | ||||||
Global Health B## | 2.95 | % | 1.74 | % | NA | * | ||||||
Global Health C# | 7.66 | % | 2.05 | % | 6.15 | % | ||||||
Global Health C## | 6.66 | % | 2.05 | % | 6.15 | % | ||||||
Global Health I# | 8.73 | % | 3.04 | % | 7.06 | % | ||||||
Global Health R3# | 8.15 | % | 2.82 | % | 7.23 | % | ||||||
Global Health R4# | 8.64 | % | 3.07 | % | 7.37 | % | ||||||
Global Health R5# | 8.89 | % | 3.25 | % | 7.47 | % | ||||||
Global Health Y# | 8.95 | % | 3.29 | % | 7.49 | % | ||||||
S&P 500 Index | 9.78 | % | 0.33 | % | -1.72 | % | ||||||
S&P North American Health Care Sector Index | 8.93 | % | 3.30 | % | 2.49 | % |
# | 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, 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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
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 | |||
How did the Fund perform? | ||||||
The Class A shares of The Hartford Global Health Fund returned 8.48%, before sales charge, for the twelve-month period ended October 31, 2009, underperforming its benchmark, the S&P North American Health Care Index, which returned 8.93% for the same period. The Fund also underperformed the 10.71% return of the average fund in the Lipper Global Health and Biotechnology peer group, a group of funds with investment strategies similar to those of the Fund. | ||||||
Why did the Fund perform this way? In early 2009, the Obama administration unveiled a proposed budget which called for funding for a national health insurance program. Health care stocks tumbled on the heels of the news. |
2
Percentage of | ||||
Industry | Net Assets | |||
Biotechnology | 18.6 | % | ||
Drug Retail | 1.3 | |||
Health Care Distributors | 8.0 | |||
Health Care Equipment | 21.6 | |||
Health Care Services | 1.1 | |||
Health Care Supplies | 0.3 | |||
Health Care Technology | 0.3 | |||
Life Sciences Tools & Services | 2.0 | |||
Managed Health Care | 8.8 | |||
Pharmaceuticals | 37.7 | |||
Specialty Stores | 0.0 | |||
Short-Term Investments | 0.2 | |||
Other Assets and Liabilities | 0.1 | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
Country | Net Assets | |||
Belgium | 1.5 | % | ||
China | 0.7 | |||
France | 0.4 | |||
Germany | 1.6 | |||
Ireland | 2.2 | |||
Israel | 2.7 | |||
Italy | 1.2 | |||
Japan | 6.9 | |||
Switzerland | 0.9 | |||
United Kingdom | 1.3 | |||
United States | 80.3 | |||
Short-Term Investments | 0.2 | |||
Other Assets and Liabilities | 0.1 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 99.7% | ||||||||
Biotechnology — 18.6% | ||||||||
250 | 3SBio, Inc. ADR • | $ | 2,587 | |||||
333 | Amgen, Inc. • | 17,908 | ||||||
351 | Amylin Pharmaceuticals, Inc. • | 3,876 | ||||||
687 | Celera Corp. • | 4,254 | ||||||
75 | Cephalon, Inc. • | 4,113 | ||||||
864 | Cytokinetics, Inc. • | 2,755 | ||||||
103 | Genzyme Corp. • | 5,227 | ||||||
105 | Gilead Sciences, Inc. • | 4,480 | ||||||
950 | Incyte Corp. • | 5,594 | ||||||
820 | Ligand Pharmaceuticals Class B • | 1,394 | ||||||
124 | OSI Pharmaceuticals, Inc. • | 4,002 | ||||||
476 | Progenics Pharmaceuticals, Inc. • | 1,994 | ||||||
169 | Regeneron Pharmaceuticals, Inc. • | 2,645 | ||||||
62 | Rigel Pharmaceuticals, Inc. • | 395 | ||||||
314 | Seattle Genetics, Inc. • | 2,847 | ||||||
122 | Vertex Pharmaceuticals, Inc. • | 4,081 | ||||||
68,152 | ||||||||
Drug Retail — 1.3% | ||||||||
127 | Walgreen Co. | 4,814 | ||||||
Health Care Distributors — 8.0% | ||||||||
287 | Amerisource Bergen Corp. | 6,362 | ||||||
369 | Cardinal Health, Inc. | 10,452 | ||||||
213 | McKesson Corp. | 12,521 | ||||||
29,335 | ||||||||
Health Care Equipment — 21.6% | ||||||||
139 | Baxter International, Inc. | 7,510 | ||||||
97 | Beckman Coulter, Inc. | 6,233 | ||||||
191 | CareFusion Corp. • | 4,282 | ||||||
303 | China Medical Technologies, Inc. ADR | 4,757 | ||||||
279 | Covidien plc | 11,735 | ||||||
116 | DiaSorin S.p.A. | 4,233 | ||||||
168 | Hospira, Inc. • | 7,499 | ||||||
459 | Medtronic, Inc. | 16,376 | ||||||
230 | St. Jude Medical, Inc. • | 7,821 | ||||||
112 | Symmetry Medical, Inc. • | 893 | ||||||
566 | Volcano Corp. • | 8,121 | ||||||
79,460 | ||||||||
Health Care Services — 1.1% | ||||||||
82 | Fresenius Medical Care AG ADR | 3,980 | ||||||
Health Care Supplies — 0.3% | ||||||||
29 | Inverness Medical Innovation, Inc. • | 1,095 | ||||||
Health Care Technology — 0.3% | ||||||||
54 | Eclipsys Corp. • | 1,015 | ||||||
Life Sciences Tools & Services — 2.0% | ||||||||
136 | PAREXEL International Corp. • | 1,707 | ||||||
120 | Thermo Fisher Scientific, Inc. • | 5,418 | ||||||
7,125 | ||||||||
Managed Health Care — 8.8% | ||||||||
255 | Aetna, Inc. | 6,638 | ||||||
203 | Coventry Health Care, Inc. • | 4,020 | ||||||
167 | Health Net, Inc. • | 2,482 | ||||||
558 | UnitedHealth Group, Inc. | 14,469 | ||||||
103 | Wellpoint, Inc. • | 4,835 | ||||||
32,444 | ||||||||
Pharmaceuticals — 37.7% | ||||||||
108 | AstraZeneca plc ADR | 4,828 | ||||||
405 | Daiichi Sankyo Co., Ltd. | 7,912 | ||||||
192 | Eisai Co., Ltd. | 6,822 | ||||||
1,492 | Elan Corp. plc ADR • | 8,130 | ||||||
117 | Eli Lilly & Co. | 3,993 | ||||||
399 | Forest Laboratories, Inc. • | 11,045 | ||||||
32 | Ipsen | 1,629 | ||||||
217 | King Pharmaceuticals, Inc. • | 2,194 | ||||||
386 | Medicines Co. • | 2,775 | ||||||
700 | Merck & Co., Inc. | 21,660 | ||||||
1,889 | Pfizer, Inc. | 32,176 | ||||||
20 | Roche Holding AG | 3,274 | ||||||
500 | Shionogi & Co., Ltd | 10,781 | ||||||
74 | Stada Arzneimittel AG | 1,978 | ||||||
196 | Teva Pharmaceutical Industries Ltd. ADR | 9,885 | ||||||
129 | UCB S.A. | 5,490 | ||||||
118 | Watson Pharmaceuticals, Inc. • | 4,068 | ||||||
138,640 | ||||||||
Specialty Stores — 0.0% | ||||||||
8 | Vitamin Shoppe, Inc. | 137 | ||||||
Total common stocks (cost $396,272) | $ | 366,197 | ||||||
WARRANTS — 0.0% | ||||||||
Biotechnology - 0.0% | ||||||||
96 | Cytokinetics, Inc. ⌂ • | $ | 42 | |||||
Total warrants (cost $-) | $ | 42 | ||||||
Total long-term investments (cost $396,272) | $ | 366,239 | ||||||
SHORT-TERM INVESTMENTS — 0.2% | ||||||||
Repurchase Agreements — 0.2% | ||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $31, collateralized by GNMA 5.00%, 2039, value of $32) | ||||||||
$ | 31 | 0.08%, 10/30/2009 | $ | 31 | ||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $183, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $187) | ||||||||
183 | 0.08%, 10/30/2009 | 183 | ||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $204, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $208) | ||||||||
204 | 0.08%, 10/30/2009 | 204 |
4
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS — 0.2% — (continued) | ||||||||||||
Repurchase Agreements — 0.2% — (continued) | ||||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $2, collateralized by U.S. Treasury Note 2.75%, 2013, value of $2) | ||||||||||||
$ | 2 | 0.05%, 10/30/2009 | $ | 2 | ||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $353, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $360) | ||||||||||||
353 | 0.07%, 10/30/2009 | 353 | ||||||||||
773 | ||||||||||||
Total short-term investments (cost $773) | $ | 773 | ||||||||||
Total investments (cost $397,045)▲ | 99.9 | % | $ | 367,012 | ||||||||
Other assets and liabilities | 0.1 | % | 397 | |||||||||
Total net assets | 100.0 | % | $ | 367,409 | ||||||||
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 19.4% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $414,104 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 32,364 | ||
Unrealized Depreciation | (79,456 | ) | ||
Net Unrealized Depreciation | $ | (47,092 | ) | |
l | 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 | |||||||||
05/2009 | 96 | Cytokinetics, Inc. Warrants | $ | — |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Japanese Yen (Sell) | $ | 345 | $ | 342 | 11/04/09 | $ | (3 | ) | ||||||||
Japanese Yen (Sell) | 62 | 62 | 11/05/09 | — | ||||||||||||
$ | (3 | ) | ||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
5
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Biotechnology | $ | 68,152 | $ | 68,152 | $ | — | $ | — | ||||||||
Drug Retail | 4,814 | 4,814 | — | — | ||||||||||||
Health Care Distributors | 29,335 | 29,335 | — | — | ||||||||||||
Health Care Equipment | 79,460 | 75,227 | 4,233 | — | ||||||||||||
Health Care Services | 3,980 | 3,980 | — | — | ||||||||||||
Health Care Supplies | 1,095 | 1,095 | — | — | ||||||||||||
Health Care Technology | 1,015 | 1,015 | — | — | ||||||||||||
Life Sciences Tools & Services | 7,125 | 7,125 | — | — | ||||||||||||
Managed Health Care | 32,444 | 32,444 | — | — | ||||||||||||
Pharmaceuticals | 138,640 | 100,754 | 37,886 | — | ||||||||||||
Specialty Stores | 137 | 137 | — | — | ||||||||||||
Total | 366,197 | 324,078 | 42,119 | — | ||||||||||||
Warrants ‡ | 42 | — | 42 | — | ||||||||||||
Short-Term Investments | 773 | — | 773 | — | ||||||||||||
Total | $ | 367,012 | $ | 324,078 | $ | 42,934 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 3 | $ | — | $ | 3 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $397,045) | $ | 367,012 | ||
Cash | 1 | |||
Receivables: | ||||
Investment securities sold | 3,319 | |||
Fund shares sold | 280 | |||
Dividends and interest | 434 | |||
Other assets | 49 | |||
Total assets | 371,095 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 3 | |||
Bank overdraft — foreign cash | — | |||
Payables: | ||||
Investment securities purchased | 2,389 | |||
Fund shares redeemed | 1,033 | |||
Investment management fees | 56 | |||
Distribution fees | 28 | |||
Accrued expenses | 177 | |||
Total liabilities | 3,686 | |||
Net assets | $ | 367,409 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 533,304 | |||
Accumulated undistributed net investment income | 3 | |||
Accumulated net realized loss on investments and foreign currency transactions | (135,866 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (30,032 | ) | ||
Net assets | $ | 367,409 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 13.07/$13.83 | ||
Shares outstanding | 17,951 | |||
Net assets | $ | 234,603 | ||
Class B: Net asset value per share | $ | 11.98 | ||
Shares outstanding | 2,651 | |||
Net assets | $ | 31,746 | ||
Class C: Net asset value per share | $ | 11.99 | ||
Shares outstanding | 6,205 | |||
Net assets | $ | 74,424 | ||
Class I: Net asset value per share | $ | 13.23 | ||
Shares outstanding | 1,204 | |||
Net assets | $ | 15,934 | ||
Class R3: Net asset value per share | $ | 13.57 | ||
Shares outstanding | 98 | |||
Net assets | $ | 1,330 | ||
Class R4: Net asset value per share | $ | 13.74 | ||
Shares outstanding | 447 | |||
Net assets | $ | 6,147 | ||
Class R5: Net asset value per share | $ | 13.87 | ||
Shares outstanding | 102 | |||
Net assets | $ | 1,412 | ||
Class Y: Net asset value per share | $ | 13.90 | ||
Shares outstanding | 130 | |||
Net assets | $ | 1,813 | ||
7
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 6,091 | ||
Interest | 5 | |||
Securities lending | 147 | |||
Less: Foreign tax withheld | (207 | ) | ||
Total investment income | 6,036 | |||
Expenses: | ||||
Investment management fees | 4,095 | |||
Administrative services fees | 11 | |||
Transfer agent fees | 1,314 | |||
Distribution fees | ||||
Class A | 642 | |||
Class B | 365 | |||
Class C | 806 | |||
Class R3 | 4 | |||
Class R4 | 13 | |||
Custodian fees | 23 | |||
Accounting services fees | 64 | |||
Registration and filing fees | 120 | |||
Board of Directors’ fees | 16 | |||
Audit fees | 22 | |||
Other expenses | 210 | |||
Total expenses (before waivers and fees paid indirectly) | 7,705 | |||
Expense waivers | (69 | ) | ||
Transfer agent fee waivers | (157 | ) | ||
Commission recapture | (50 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (276 | ) | ||
Total expenses, net | 7,429 | |||
Net Investment Loss | (1,393 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (127,105 | ) | ||
Net realized loss on forward foreign currency contracts | (315 | ) | ||
Net realized gain on other foreign currency transactions | 456 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (126,964 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 138,766 | |||
Net unrealized depreciation of forward foreign currency contracts | (3 | ) | ||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (74 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 138,689 | |||
Net Gain on Investments and Foreign Currency Transactions | 11,725 | |||
Net Increase in Net Assets Resulting from Operations | $ | 10,332 | ||
8
(000’s Omitted)
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment loss | $ | (1,393 | ) | $ | (2,072 | ) | ||
Net realized gain (loss) on investments and foreign currency transactions | (126,964 | ) | 23,413 | |||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 138,689 | (281,548 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 10,332 | (260,207 | ) | |||||
Distributions to Shareholders: | ||||||||
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 | (7,033 | ) | (14,030 | ) | ||||
Total distributions | (30,076 | ) | (66,426 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (68,275 | ) | (40,482 | ) | ||||
Class B | (13,501 | ) | (11,375 | ) | ||||
Class C | (19,147 | ) | 3,916 | |||||
Class I | (24,782 | ) | 37,815 | |||||
Class R3 | 754 | 521 | ||||||
Class R4 | 1,884 | 4,527 | ||||||
Class R5 | (113 | ) | 1,511 | |||||
Class Y | (132,062 | ) | 14,054 | |||||
Net increase (decrease) from capital share transactions | (255,242 | ) | 10,487 | |||||
Net Decrease In Net Assets | (274,986 | ) | (316,146 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 642,395 | 958,541 | ||||||
End of period | $ | 367,409 | $ | 642,395 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 3 | $ | — | ||||
9
October 31, 2009
(000’s Omitted)
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
10
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management |
11
October 31, 2009
(000’s Omitted)
judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 |
12
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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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. |
13
October 31, 2009
(000’s Omitted)
k) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||||
Foreign exchange contracts | Unrealized depreciation on forward | $ | 3 | |||||||||
foreign currency contracts |
The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the year ended October 31, 2009. | |||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | (315 | ) | $ | — | $ | (315 | ) | ||||||||||
Total | $ | — | $ | — | $ | — | $ | (315 | ) | $ | — | $ | (315 | ) | ||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | (3 | ) | — | $ | (3 | ) | |||||||||||||||
Total | $ | — | $ | — | $ | — | $ | (3 | ) | $ | — | $ | (3 | ) | ||||||||||
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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
14
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | — | $ | 18,256 | ||||
Long-Term Capital Gains * | 30,076 | 48,170 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Accumulated Capital Losses * | $ | (118,807 | ) | |
Unrealized Depreciation † | (47,088 | ) | ||
Total Accumulated Deficit | $ | (165,895 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase accumulated undistributed net investment income by $1,396, decrease accumulated net realized loss on investments by $90, and decrease paid-in-capital by $1,306. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2017 | $ | 118,807 | ||
Total | $ | 118,807 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 year ended October 31, 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 services 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 year ended October 31, 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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.54 | % | 1.41 | % | 1.40 | % | 1.60 | % | 1.58 | % | ||||||||||
Class B Shares | 2.10 | 2.24 | 2.29 | 2.31 | 2.33 | |||||||||||||||
Class C Shares | 2.26 | 2.14 | 2.14 | 2.31 | 2.33 | |||||||||||||||
Class I Shares | 1.26 | 1.10 | 1.08 | 1.14 | * | |||||||||||||||
Class R3 Shares | 1.78 | 1.85 | 1.77 | † | ||||||||||||||||
Class R4 Shares | 1.39 | 1.35 | 1.45 | † | ||||||||||||||||
Class R5 Shares | 1.09 | 1.05 | 1.17 | † | ||||||||||||||||
Class Y Shares | 0.99 | 0.95 | 0.95 | 1.08 | 1.06 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006. | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007. |
16
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $315 and contingent deferred sales charges of $91 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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. | |||
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $1,180 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
17
Notes to Financial Statements — (continued)
October 31, 2009
(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 | Affiliate for the | |||||||
the Year Ended | Year Ended | |||||||
October 31, | October 31, | |||||||
2007 | 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 |
For the year ended October 31, 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 | $ | 366,727 | ||
Sales Proceeds Excluding U.S. Government Obligations | 657,720 |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 3,167 | 1,127 | (9,957 | ) | — | (5,663 | ) | 6,482 | 1,678 | (11,571 | ) | — | (3,411 | ) | ||||||||||||||||||||||||||
Amount | $ | 37,894 | $ | 12,851 | $ | (119,020 | ) | $ | — | $ | (68,275 | ) | $ | 104,793 | $ | 28,823 | $ | (174,098 | ) | $ | — | $ | (40,482 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 141 | 203 | (1,565 | ) | — | (1,221 | ) | 338 | 351 | (1,509 | ) | — | (820 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,517 | $ | 2,130 | $ | (17,148 | ) | $ | — | $ | (13,501 | ) | $ | 5,133 | $ | 5,622 | $ | (22,130 | ) | $ | — | $ | (11,375 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 600 | 363 | (2,670 | ) | — | (1,707 | ) | 1,437 | 515 | (1,782 | ) | — | 170 | |||||||||||||||||||||||||||
Amount | $ | 6,558 | $ | 3,822 | $ | (29,527 | ) | $ | — | $ | (19,147 | ) | $ | 21,700 | $ | 8,271 | $ | (26,055 | ) | $ | — | $ | 3,916 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 842 | 130 | (3,127 | ) | — | (2,155 | ) | 4,410 | 49 | (1,892 | ) | — | 2,567 | |||||||||||||||||||||||||||
Amount | $ | 10,689 | $ | 1,501 | $ | (36,972 | ) | $ | — | $ | (24,782 | ) | $ | 63,808 | $ | 851 | $ | (26,844 | ) | $ | — | $ | 37,815 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 70 | 2 | (12 | ) | — | 60 | 35 | — | (3 | ) | — | 32 | ||||||||||||||||||||||||||||
Amount | $ | 890 | $ | 23 | $ | (159 | ) | $ | — | $ | 754 | $ | 557 | $ | 7 | $ | (43 | ) | $ | — | $ | 521 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 207 | 16 | (71 | ) | — | 152 | 294 | 2 | (26 | ) | — | 270 | ||||||||||||||||||||||||||||
Amount | $ | 2,596 | $ | 189 | $ | (901 | ) | $ | — | $ | 1,884 | $ | 4,897 | $ | 36 | $ | (406 | ) | $ | — | $ | 4,527 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 29 | 6 | (41 | ) | — | (6 | ) | 110 | 1 | (25 | ) | — | 86 | |||||||||||||||||||||||||||
Amount | $ | 350 | $ | 65 | $ | (528 | ) | $ | — | $ | (113 | ) | $ | 1,917 | $ | 25 | $ | (431 | ) | $ | — | $ | 1,511 | |||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 26 | 582 | (12,052 | ) | — | (11,444 | ) | 29 | 777 | (28 | ) | — | 778 | |||||||||||||||||||||||||||
Amount | $ | 324 | $ | 7,033 | $ | (139,419 | ) | $ | — | $ | (132,062 | ) | $ | 519 | $ | 14,028 | $ | (493 | ) | $ | — | $ | 14,054 |
18
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 445 | $ | 5,299 | |||||
For the Year Ended October 31, 2008 | 324 | $ | 5,117 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
19
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 12.69 | $ | (0.02 | ) | $ | — | $ | 1.01 | $ | 0.99 | $ | — | $ | (0.61 | ) | $ | — | $ | (0.61 | ) | $ | 0.38 | $ | 13.07 | |||||||||||||||||||
B | 11.74 | (0.08 | ) | — | 0.93 | 0.85 | — | (0.61 | ) | — | (0.61 | ) | 0.24 | 11.98 | ||||||||||||||||||||||||||||||
C | 11.78 | (0.10 | ) | — | 0.92 | 0.82 | — | (0.61 | ) | — | (0.61 | ) | 0.21 | 11.99 | ||||||||||||||||||||||||||||||
I | 12.81 | 0.01 | — | 1.02 | 1.03 | — | (0.61 | ) | — | (0.61 | ) | 0.42 | 13.23 | |||||||||||||||||||||||||||||||
R3 | 13.19 | (0.05 | ) | — | 1.04 | 0.99 | — | (0.61 | ) | — | (0.61 | ) | 0.38 | 13.57 | ||||||||||||||||||||||||||||||
R4 | 13.29 | — | — | 1.06 | 1.06 | — | (0.61 | ) | — | (0.61 | ) | 0.45 | 13.74 | |||||||||||||||||||||||||||||||
R5 | 13.38 | 0.03 | — | 1.07 | 1.10 | — | (0.61 | ) | — | (0.61 | ) | 0.49 | 13.87 | |||||||||||||||||||||||||||||||
Y | 13.40 | 0.01 | — | 1.10 | 1.11 | — | (0.61 | ) | — | (0.61 | ) | 0.50 | 13.90 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 18.85 | (0.03 | ) | — | (4.83 | ) | (4.86 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.16 | ) | 12.69 | |||||||||||||||||||||||||||
B | 17.67 | (0.18 | ) | — | (4.45 | ) | (4.63 | ) | — | (1.30 | ) | — | (1.30 | ) | (5.93 | ) | 11.74 | |||||||||||||||||||||||||||
C | 17.71 | (0.14 | ) | — | (4.49 | ) | (4.63 | ) | — | (1.30 | ) | — | (1.30 | ) | (5.93 | ) | 11.78 | |||||||||||||||||||||||||||
I | 18.96 | 0.01 | — | (4.86 | ) | (4.85 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.15 | ) | 12.81 | ||||||||||||||||||||||||||||
R3 | 19.59 | (0.03 | ) | — | (5.07 | ) | (5.10 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.40 | ) | 13.19 | |||||||||||||||||||||||||||
R4 | 19.66 | — | — | (5.07 | ) | (5.07 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.37 | ) | 13.29 | ||||||||||||||||||||||||||||
R5 | 19.70 | 0.03 | — | (5.05 | ) | (5.02 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.32 | ) | 13.38 | ||||||||||||||||||||||||||||
Y | 19.74 | 0.05 | — | (5.09 | ) | (5.04 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.34 | ) | 13.40 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 17.84 | (0.04 | ) | — | 1.73 | 1.69 | — | (0.68 | ) | — | (0.68 | ) | 1.01 | 18.85 | ||||||||||||||||||||||||||||||
B | 16.92 | (0.20 | ) | — | 1.63 | 1.43 | — | (0.68 | ) | — | (0.68 | ) | 0.75 | 17.67 | ||||||||||||||||||||||||||||||
C | 16.93 | (0.15 | ) | — | 1.61 | 1.46 | — | (0.68 | ) | — | (0.68 | ) | 0.78 | 17.71 | ||||||||||||||||||||||||||||||
I | 17.86 | 0.01 | — | 1.77 | 1.78 | — | (0.68 | ) | — | (0.68 | ) | 1.10 | 18.96 | |||||||||||||||||||||||||||||||
R3(g) | 18.27 | (0.02 | ) | — | 1.34 | 1.32 | — | — | — | — | 1.32 | 19.59 | ||||||||||||||||||||||||||||||||
R4(g) | 18.27 | — | — | 1.39 | 1.39 | — | — | — | — | 1.39 | 19.66 | |||||||||||||||||||||||||||||||||
R5(g) | 18.27 | — | — | 1.43 | 1.43 | — | — | — | — | 1.43 | 19.70 | |||||||||||||||||||||||||||||||||
Y | 18.57 | 0.04 | — | 1.81 | 1.85 | — | (0.68 | ) | — | (0.68 | ) | 1.17 | 19.74 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 16.50 | (0.07 | ) | — | 2.41 | 2.34 | — | (1.00 | ) | — | (1.00 | ) | 1.34 | 17.84 | ||||||||||||||||||||||||||||||
B | 15.81 | (0.20 | ) | — | 2.31 | 2.11 | — | (1.00 | ) | — | (1.00 | ) | 1.11 | 16.92 | ||||||||||||||||||||||||||||||
C | 15.81 | (0.18 | ) | — | 2.30 | 2.12 | — | (1.00 | ) | — | (1.00 | ) | 1.12 | 16.93 | ||||||||||||||||||||||||||||||
I(j) | 17.34 | — | — | 0.52 | 0.52 | — | — | — | — | 0.52 | 17.86 | |||||||||||||||||||||||||||||||||
Y | 17.05 | (0.01 | ) | — | 2.53 | 2.52 | — | (1.00 | ) | — | (1.00 | ) | 1.52 | 18.57 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 15.00 | (0.08 | ) | — | 2.35 | 2.27 | — | (0.77 | ) | — | (0.77 | ) | 1.50 | 16.50 | ||||||||||||||||||||||||||||||
B | 14.50 | (0.20 | ) | — | 2.28 | 2.08 | — | (0.77 | ) | — | (0.77 | ) | 1.31 | 15.81 | ||||||||||||||||||||||||||||||
C | 14.51 | (0.19 | ) | — | 2.26 | 2.07 | — | (0.77 | ) | — | (0.77 | ) | 1.30 | 15.81 | ||||||||||||||||||||||||||||||
Y | 15.41 | (0.01 | ) | — | 2.42 | 2.41 | — | (0.77 | ) | — | (0.77 | ) | 1.64 | 17.05 |
(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) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Not annualized. | |
(i) | Annualized. | |
(j) | Commenced operations on August 31, 2006. |
20
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||
8.48 | % | $ | 234,603 | 1.58 | % | 1.55 | % | 1.55 | % | (0.18 | )% | 80 | % | |||||||||||||
7.95 | 31,746 | 2.54 | 2.11 | 2.11 | (0.75 | ) | — | |||||||||||||||||||
7.66 | 74,424 | 2.28 | 2.28 | 2.28 | (0.91 | ) | — | |||||||||||||||||||
8.73 | 15,934 | 1.27 | 1.27 | 1.27 | 0.04 | — | ||||||||||||||||||||
8.15 | 1,330 | 1.79 | 1.79 | 1.79 | (0.36 | ) | — | |||||||||||||||||||
8.64 | 6,147 | 1.40 | 1.40 | 1.40 | 0.00 | — | ||||||||||||||||||||
8.89 | 1,412 | 1.11 | 1.11 | 1.11 | 0.27 | — | ||||||||||||||||||||
8.95 | 1,813 | 0.99 | 0.99 | 0.99 | 0.11 | — | ||||||||||||||||||||
(27.59 | ) | 299,699 | 1.41 | 1.41 | 1.41 | (0.18 | ) | 67 | ||||||||||||||||||
(28.17 | ) | 45,475 | 2.32 | 2.24 | 2.24 | (1.02 | ) | — | ||||||||||||||||||
(28.10 | ) | 93,208 | 2.15 | 2.15 | 2.15 | (0.92 | ) | — | ||||||||||||||||||
(27.36 | ) | 43,036 | 1.11 | 1.11 | 1.11 | 0.10 | — | |||||||||||||||||||
(27.78 | ) | 503 | 1.91 | 1.85 | 1.85 | (0.67 | ) | — | ||||||||||||||||||
(27.52 | ) | 3,921 | 1.35 | 1.35 | 1.35 | (0.02 | ) | — | ||||||||||||||||||
(27.18 | ) | 1,449 | 1.05 | 1.05 | 1.05 | 0.27 | — | |||||||||||||||||||
(27.23 | ) | 155,104 | 0.95 | 0.95 | 0.95 | 0.28 | — | |||||||||||||||||||
9.96 | (f) | 509,341 | 1.41 | 1.41 | 1.41 | (0.25 | ) | 41 | ||||||||||||||||||
8.92 | (f) | 82,932 | 2.30 | 2.29 | 2.29 | (1.15 | ) | — | ||||||||||||||||||
9.11 | (f) | 137,101 | 2.15 | 2.15 | 2.15 | (0.99 | ) | — | ||||||||||||||||||
10.48 | (f) | 15,017 | 1.07 | 1.07 | 1.07 | 0.08 | — | |||||||||||||||||||
7.22 | (h) | 112 | 1 .75 | (i) | 1 .75 | (i) | 1 .75 | (i) | (0 .50 | ) (i) | — | |||||||||||||||
7.61 | (h) | 494 | 1 .41 | (i) | 1 .41 | (i) | 1 .41 | (i) | — | (i) | — | |||||||||||||||
7.83 | (h) | 434 | 1 .14 | (i) | 1 .14 | (i) | 1 .14 | (i) | — | (i) | — | |||||||||||||||
10.45 | (f) | 213,110 | 0.95 | 0.95 | 0.95 | 0.20 | — | |||||||||||||||||||
14.96 | 370,285 | 1.61 | 1.60 | 1.60 | (0.53 | ) | 30 | |||||||||||||||||||
14.10 | 80,574 | 2.45 | 2.32 | 2.32 | (1.27 | ) | — | |||||||||||||||||||
14.17 | 97,956 | 2.31 | 2.31 | 2.31 | (1.25 | ) | — | |||||||||||||||||||
3.00 | (h) | 785 | 1 .26 | (i) | 1 .15 | (i) | 1 .15 | (i) | (0 .20 | ) (i) | — | |||||||||||||||
15.56 | 192,814 | 1.08 | 1.08 | 1.08 | (0.03 | ) | — | |||||||||||||||||||
15.67 | 209,835 | 1.71 | 1.60 | 1.60 | (0.55 | ) | 50 | |||||||||||||||||||
14.86 | 71,204 | 2.52 | 2.35 | 2.35 | (1.30 | ) | — | |||||||||||||||||||
14.78 | 72,546 | 2.36 | 2.35 | 2.35 | (1.30 | ) | — | |||||||||||||||||||
16.19 | 169,698 | 1.08 | 1.08 | 1.08 | (0.12 | ) | — |
21
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
22
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
23
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 — 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009. |
24
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
25
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | N/A | N/A | 0.608 | 0.608 | ||||||||||||
Class B | N/A | N/A | 0.608 | 0.608 | ||||||||||||
Class C | N/A | N/A | 0.608 | 0.608 | ||||||||||||
Class I | N/A | N/A | 0.608 | 0.608 | ||||||||||||
Class R3 | N/A | N/A | 0.608 | 0.608 | ||||||||||||
Class R4 | N/A | N/A | 0.608 | 0.608 | ||||||||||||
Class R5 | N/A | N/A | 0.608 | 0.608 | ||||||||||||
Class Y | N/A | N/A | 0.608 | 0.608 |
26
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,172.20 | $ | 8.49 | $ | 1,000.00 | $ | 1,017.39 | $ | 7.88 | 1.55 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,169.90 | $ | 11.65 | $ | 1,000.00 | $ | 1,014.47 | $ | 10.82 | 2.13 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,168.60 | $ | 12.41 | $ | 1,000.00 | $ | 1,013.76 | $ | 11.52 | 2.27 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,173.90 | $ | 6.96 | $ | 1,000.00 | $ | 1,018.80 | $ | 6.46 | 1.27 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,170.80 | $ | 9.74 | $ | 1,000.00 | $ | 1,016.23 | $ | 9.05 | 1.78 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,173.40 | $ | 7.67 | $ | 1,000.00 | $ | 1,018.15 | $ | 7.12 | 1.40 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,174.40 | $ | 6.08 | $ | 1,000.00 | $ | 1,019.61 | $ | 5.65 | 1.11 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,175.00 | $ | 6.41 | $ | 1,000.00 | $ | 1,019.31 | $ | 5.96 | 1.17 | 184 | 365 |
27
28
29
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
30
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks long-term capital appreciation. |
Growth of a $10,000 investment in Class A which includes Sales Charge
Growth Allocation A Barclays Capital U.S. $9,450 starting value Aggregate Bond Index $11,024 ending value $10,000 starting value $13,390 ending value S&P 500 Index $10,000 starting value $10,327 ending value |
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
Growth Allocation A# | 17.06 | % | 2.40 | % | 2.88 | % | ||||||
Growth Allocation A## | 10.62 | % | 1.25 | % | 1.81 | % | ||||||
Growth Allocation B# | 16.13 | % | 1.65 | % | 2.14 | % | ||||||
Growth Allocation B## | 11.13 | % | 1.30 | % | 1.98 | % | ||||||
Growth Allocation C# | 16.10 | % | 1.68 | % | 2.15 | % | ||||||
Growth Allocation C## | 15.10 | % | 1.68 | % | 2.15 | % | ||||||
Growth Allocation I# | 17.47 | % | 2.63 | % | 3.09 | % | ||||||
Growth Allocation R3# | 16.76 | % | 2.18 | % | 2.67 | % | ||||||
Growth Allocation R4# | 16.96 | % | 2.40 | % | 2.88 | % | ||||||
Growth Allocation R5# | 17.38 | % | 2.57 | % | 3.03 | % | ||||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 5.05 | % | 5.52 | % | ||||||
S&P 500 Index | 9.78 | % | 0.33 | % | 0.59 | % |
# | 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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 0 .7 | % | ||
SPDR DJ Wilshire REIT ETF | 0 .2 | |||
The Hartford Capital Appreciation Fund, Class Y | 20 .7 | |||
The Hartford Capital Appreciation II Fund, Class Y | 0 .2 | |||
The Hartford Disciplined Equity Fund, Class Y | 3 .0 | |||
The Hartford Dividend and Growth Fund, Class Y | 2 .9 | |||
The Hartford Equity Income Fund, Class Y | 2 .6 | |||
The Hartford Fundamental Growth Fund, Class Y | 0 .9 | |||
The Hartford Global Growth Fund, Class Y | 7 .2 | |||
The Hartford Growth Fund, Class Y | 2 .5 | |||
The Hartford Growth Opportunities Fund, Class Y | 5 .5 | |||
The Hartford Inflation Plus Fund, Class Y | 3 .9 | |||
The Hartford International Opportunities Fund, Class Y | 4 .3 | |||
The Hartford International Small Company Fund, Class Y | 5 .1 | |||
The Hartford MidCap Fund, Class Y | 0 .4 | |||
The Hartford Select MidCap Value Fund, Class Y | 1 .7 | |||
The Hartford Select SmallCap Value Fund, Class Y | 4 .6 | |||
The Hartford Short Duration Fund, Class Y | 2 .3 | |||
The Hartford Small Company Fund, Class Y | 3 .9 | |||
The Hartford SmallCap Growth Fund, Class Y | 0 .1 | |||
The Hartford Total Return Bond Fund, Class Y | 12 .5 | |||
The Hartford Value Fund, Class Y | 14 .8 | |||
Other Assets and Liabilities | 0 .0 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 99.1% | ||||||||||||
EQUITY FUNDS — 80.4% | ||||||||||||
4,392 | The Hartford Capital Appreciation Fund, Class Y | $ | 132,825 | |||||||||
97 | The Hartford Capital Appreciation II Fund, Class Y • | 1,068 | ||||||||||
1,789 | The Hartford Disciplined Equity Fund, Class Y | 19,245 | ||||||||||
1,158 | The Hartford Dividend and Growth Fund, Class Y | 18,825 | ||||||||||
1,561 | The Hartford Equity Income Fund, Class Y | 16,872 | ||||||||||
631 | The Hartford Fundamental Growth Fund, Class Y • | 5,935 | ||||||||||
3,485 | The Hartford Global Growth Fund, Class Y • | 46,423 | ||||||||||
1,134 | The Hartford Growth Fund, Class Y • | 16,049 | ||||||||||
1,630 | The Hartford Growth Opportunities Fund, Class Y • | 35,186 | ||||||||||
2,100 | The Hartford International Opportunities Fund, Class Y | 27,445 | ||||||||||
2,969 | The Hartford International Small Company Fund, Class Y | 32,335 | ||||||||||
159 | The Hartford MidCap Fund, Class Y • | 2,812 | ||||||||||
1,438 | The Hartford Select MidCap Value Fund, Class Y | 11,055 | ||||||||||
3,697 | The Hartford Select SmallCap Value Fund, Class Y | 29,425 | ||||||||||
1,645 | The Hartford Small Company Fund, Class Y • | 24,718 | ||||||||||
24 | The Hartford SmallCap Growth Fund, Class Y • | 508 | ||||||||||
9,957 | The Hartford Value Fund, Class Y | 95,091 | ||||||||||
Total equity funds (cost $650,617) | $ | 515,817 | ||||||||||
FIXED INCOME FUNDS — 18.7% | ||||||||||||
2,158 | The Hartford Inflation Plus Fund, Class Y | $ | 24,662 | |||||||||
1,525 | The Hartford Short Duration Fund, Class Y | 14,637 | ||||||||||
7,759 | The Hartford Total Return Bond Fund, Class Y | 80,227 | ||||||||||
Total fixed income funds (cost $118,474) | $ | 119,526 | ||||||||||
Total investments in affiliated investment companies (cost $769,091) | $ | 635,343 | ||||||||||
EXCHANGE TRADED FUNDS — 0.9% | ||||||||||||
127 | SPDR DJ Wilshire International Real Estate ETF | $ | 4,381 | |||||||||
30 | SPDR DJ Wilshire REIT ETF | 1,298 | ||||||||||
Total exchange traded funds (cost $8,046) | $ | 5,679 | ||||||||||
Total long-term investments (cost $777,137) | $ | 641,022 | ||||||||||
Total investments (cost $777,137) 5 | 100.0 | % | $ | 641,022 | ||||||||
Other assets and liabilities | — | % | 246 | |||||||||
Total net assets | 100.0 | % | $ | 641,268 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
5 | At October 31, 2009, the cost of securities for federal income tax purposes was $778,291 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 6,039 | ||
Unrealized Depreciation | (143,308 | ) | ||
Net Unrealized Depreciation | $ | (137,269 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 635,343 | $ | 635,343 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 5,679 | 5,679 | — | — | ||||||||||||
Total | $ | 641,022 | $ | 641,022 | $ | — | $ | — | ||||||||
5
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $8,046) | $ | 5,679 | ||
Investments in underlying affiliated funds, at market value (cost $769,091) | 635,343 | |||
Receivables: | ||||
Investment securities sold | 46 | |||
Fund shares sold | 941 | |||
Dividends and interest | 353 | |||
Other assets | 49 | |||
Total assets | 642,411 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 902 | |||
Investment management fees | 15 | |||
Distribution fees | 59 | |||
Accrued expenses | 167 | |||
Total liabilities | 1,143 | |||
Net assets | $ | 641,268 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 789,108 | |||
Accumulated undistributed net investment income | 252 | |||
Accumulated net realized loss on investments | (11,977 | ) | ||
Unrealized depreciation of investments | (136,115 | ) | ||
Net assets | $ | 641,268 | ||
Shares authorized | 400,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 9.58/$10.14 | ||
Shares outstanding | 38,276 | |||
Net assets | $ | 366,509 | ||
Class B: Net asset value per share | $ | 9.50 | ||
Shares outstanding | 10,017 | |||
Net assets | $ | 95,176 | ||
Class C: Net asset value per share | $ | 9.49 | ||
Shares outstanding | 16,911 | |||
Net assets | $ | 160,530 | ||
Class I: Net asset value per share | $ | 9.55 | ||
Shares outstanding | 244 | |||
Net assets | $ | 2,335 | ||
Class R3: Net asset value per share | $ | 9.50 | ||
Shares outstanding | 114 | |||
Net assets | $ | 1,081 | ||
Class R4: Net asset value per share | $ | 9.53 | ||
Shares outstanding | 1,112 | |||
Net assets | $ | 10,597 | ||
Class R5: Net asset value per share | $ | 9.58 | ||
Shares outstanding | 526 | |||
Net assets | $ | 5,040 | ||
6
For the Year Ended October 31, 2009
000’s Omitted)
Investment Income: | ||||
Dividends | $ | 226 | ||
Dividends from underlying affiliated funds | 11,817 | |||
Interest | — | |||
Total investment income | 12,043 | |||
Expenses: | ||||
Investment management fees | 814 | |||
Administrative services fees | 17 | |||
Transfer agent fees | 1,265 | |||
Distribution fees | ||||
Class A | 812 | |||
Class B | 860 | |||
Class C | 1,412 | |||
Class R3 | 2 | |||
Class R4 | 20 | |||
Custodian fees | 1 | |||
Accounting services fees | 68 | |||
Registration and filing fees | 113 | |||
Board of Directors’ fees | 16 | |||
Audit fees | 24 | |||
Other expenses | 156 | |||
Total expenses (before waivers) | 5,580 | |||
Expense waivers | (62 | ) | ||
Transfer agent fee waivers | — | |||
Total waivers | (62 | ) | ||
Total expenses, net | 5,518 | |||
Net Investment Income | 6,525 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (11,403 | ) | ||
Net realized loss on investments in securities | (23 | ) | ||
Net Realized Loss on Investments | (11,426 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 92,975 | |||
Net Changes in Unrealized Appreciation of Investments | 92,975 | |||
Net Gain on Investments | 81,549 | |||
Net Increase in Net Assets Resulting from Operations | $ | 88,074 | ||
7
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 6,525 | $ | 5,854 | ||||
Net realized gain (loss) on investments | (11,426 | ) | 36,540 | |||||
Net unrealized appreciation (depreciation) of investments | 92,975 | (361,257 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 88,074 | (318,863 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (6,850 | ) | (17,401 | ) | ||||
Class B | (892 | ) | (4,046 | ) | ||||
Class C | (1,564 | ) | (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 | (3,308 | ) | (13,242 | ) | ||||
Class I | (29 | ) | (44 | ) | ||||
Class R3 | (1 | ) | (3 | ) | ||||
Class R4 | (122 | ) | (69 | ) | ||||
Class R5 | (66 | ) | (38 | ) | ||||
Total distributions | (22,406 | ) | (77,330 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (389 | ) | 50,492 | |||||
Class B | (4,589 | ) | 9,391 | |||||
Class C | (3,865 | ) | 14,661 | |||||
Class I | 814 | 1,089 | ||||||
Class R3 | 914 | 28 | ||||||
Class R4 | 4,434 | 6,717 | ||||||
Class R5 | 1,567 | 3,083 | ||||||
Net increase (decrease) from capital share transactions | (1,114 | ) | 85,461 | |||||
Net Increase (Decrease) In Net Assets | 64,554 | (310,732 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 576,714 | 887,446 | ||||||
End of period | $ | 641,268 | $ | 576,714 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 252 | $ | 3,277 | ||||
8
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 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 September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 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 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. |
9
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. | ||
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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. 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 Valuation Time. 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 are 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable representation of exit price. |
10
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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may use 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 October 31, 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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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. |
11
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 9,550 | $ | 31,057 | ||||
Long-Term Capital Gains * | 12,856 | 46,273 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 252 | ||
Accumulated Capital Losses * | (10,823 | ) | ||
Unrealized Depreciation † | (137,269 | ) | ||
Total Accumulated Deficit | $ | (147,840 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. |
12
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2017 | $ | 10,823 | ||
Total | $ | 10,823 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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. |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $1,941 and contingent deferred sales charges of $266 from the Fund. |
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $105. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $1,265 for providing such services. These fees are accrued daily and paid monthly. |
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: |
For the year ended October 31, 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 | $ | 39,203 | ||
Sales Proceeds Excluding U.S. Government Obligations | 55,981 |
14
6. | Capital Share Transactions: |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 8,739 | 1,812 | (10,645 | ) | — | (94 | ) | 8,156 | 3,356 | (7,836 | ) | — | 3,676 | |||||||||||||||||||||||||||
Amount | $ | 72,072 | $ | 13,786 | $ | (86,247 | ) | $ | — | $ | (389 | ) | $ | 95,331 | $ | 43,714 | $ | (88,553 | ) | $ | — | $ | 50,492 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,124 | 372 | (2,054 | ) | — | (558 | ) | 1,707 | 883 | (1,974 | ) | — | 616 | |||||||||||||||||||||||||||
Amount | $ | 9,071 | $ | 2,803 | $ | (16,463 | ) | $ | — | $ | (4,589 | ) | $ | 20,111 | $ | 11,427 | $ | (22,147 | ) | $ | — | $ | 9,391 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,853 | 587 | (5,044 | ) | — | (604 | ) | 4,885 | 1,351 | (5,357 | ) | — | 879 | |||||||||||||||||||||||||||
Amount | $ | 31,960 | $ | 4,413 | $ | (40,238 | ) | $ | — | $ | (3,865 | ) | $ | 56,954 | $ | 17,474 | $ | (59,767 | ) | $ | — | $ | 14,661 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 119 | 8 | (36 | ) | — | 91 | 122 | 6 | (30 | ) | — | 98 | ||||||||||||||||||||||||||||
Amount | $ | 1,056 | $ | 63 | $ | (305 | ) | $ | — | $ | 814 | $ | 1,352 | $ | 75 | $ | (338 | ) | $ | — | $ | 1,089 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 135 | — | (27 | ) | — | 108 | 3 | — | (1 | ) | — | 2 | ||||||||||||||||||||||||||||
Amount | $ | 1,143 | $ | 2 | $ | (231 | ) | $ | — | $ | 914 | $ | 30 | $ | 5 | $ | (7 | ) | $ | — | $ | 28 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 676 | 34 | (162 | ) | — | 548 | 707 | 9 | (174 | ) | — | 542 | ||||||||||||||||||||||||||||
Amount | $ | 5,433 | $ | 253 | $ | (1,252 | ) | $ | — | $ | 4,434 | $ | 8,547 | $ | 120 | $ | (1,950 | ) | $ | — | $ | 6,717 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 246 | 19 | (78 | ) | — | 187 | 320 | 5 | (40 | ) | — | 285 | ||||||||||||||||||||||||||||
Amount | $ | 1,988 | $ | 144 | $ | (565 | ) | $ | — | $ | 1,567 | $ | 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) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 136 | $ | 1,107 | |||||
For the Year Ended October 31, 2008 | 110 | $ | 1,271 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. |
8. | Subsequent Events: |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.58 | $ | 0.12 | $ | — | $ | 1.24 | $ | 1.36 | $ | (0.17 | ) | $ | (0.19 | ) | $ | — | $ | (0.36 | ) | $ | 1.00 | $ | 9.58 | |||||||||||||||||||
B | 8.48 | 0.06 | — | 1.23 | 1.29 | (0.08 | ) | (0.19 | ) | — | (0.27 | ) | 1.02 | 9.50 | ||||||||||||||||||||||||||||||
C | 8.48 | 0.06 | — | 1.23 | 1.29 | (0.09 | ) | (0.19 | ) | — | (0.28 | ) | 1.01 | 9.49 | ||||||||||||||||||||||||||||||
I | 8.57 | 0.14 | — | 1.25 | 1.39 | (0.22 | ) | (0.19 | ) | — | (0.41 | ) | 0.98 | 9.55 | ||||||||||||||||||||||||||||||
R3 | 8.51 | 0.03 | — | 1.30 | 1.33 | (0.15 | ) | (0.19 | ) | — | (0.34 | ) | 0.99 | 9.50 | ||||||||||||||||||||||||||||||
R4 | 8.56 | 0.10 | — | 1.25 | 1.35 | (0.19 | ) | (0.19 | ) | — | (0.38 | ) | 0.97 | 9.53 | ||||||||||||||||||||||||||||||
R5 | 8.60 | 0.13 | — | 1.25 | 1.38 | (0.21 | ) | (0.19 | ) | — | (0.40 | ) | 0.98 | 9.58 | ||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 14.37 | 0.03 | — | (4.74 | ) | (4.71 | ) | (0.39 | ) | (0.79 | ) | — | (1 .18 | ) | (5.89 | ) | 8.48 | |||||||||||||||||||||||||||
C | 14.37 | 0.04 | — | (4.75 | ) | (4.71 | ) | (0.39 | ) | (0.79 | ) | — | (1 .18 | ) | (5.89 | ) | 8.48 | |||||||||||||||||||||||||||
I | 14.49 | 0.37 | — | (4.98 | ) | (4.61 | ) | (0.52 | ) | (0.79 | ) | — | (1 .31 | ) | (5.92 | ) | 8.57 | |||||||||||||||||||||||||||
R3 | 14.46 | 0.18 | — | (4.87 | ) | (4.69 | ) | (0.47 | ) | (0.79 | ) | — | (1 .26 | ) | (5.95 | ) | 8.51 | |||||||||||||||||||||||||||
R4 | 14.51 | 0.43 | — | (5.08 | ) | (4.65 | ) | (0.51 | ) | (0.79 | ) | — | (1 .30 | ) | (5.95 | ) | 8.56 | |||||||||||||||||||||||||||
R5 | 14.54 | 0.46 | — | (5.09 | ) | (4.63 | ) | (0.52 | ) | (0.79 | ) | — | (1 .31 | ) | (5.94 | ) | 8.60 | |||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 12.57 | 0.04 | — | 2.21 | 2.25 | (0.17 | ) | (0.28 | ) | — | (0.45 | ) | 1.80 | 14.37 | ||||||||||||||||||||||||||||||
C | 12.57 | 0.05 | — | 2.20 | 2.25 | (0.17 | ) | (0.28 | ) | — | (0.45 | ) | 1.80 | 14.37 | ||||||||||||||||||||||||||||||
I | 12.67 | 0.26 | — | 2.14 | 2.40 | (0.30 | ) | (0.28 | ) | — | (0.58 | ) | 1.82 | 14.49 | ||||||||||||||||||||||||||||||
R3(f) | 12.59 | (0.02 | ) | — | 1.89 | 1.87 | — | — | — | — | 1.87 | 14.46 | ||||||||||||||||||||||||||||||||
R4(f) | 12.59 | — | — | 1.92 | 1.92 | — | — | — | — | 1.92 | 14.51 | |||||||||||||||||||||||||||||||||
R5(f) | 12.59 | — | — | 1.95 | 1.95 | — | — | — | — | 1.95 | 14.54 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 11.19 | 0.03 | — | 1.42 | 1.45 | (0.06 | ) | (0.01 | ) | — | (0.07 | ) | 1.38 | 12.57 | ||||||||||||||||||||||||||||||
C | 11.19 | 0.03 | — | 1.42 | 1.45 | (0.06 | ) | (0.01 | ) | — | (0.07 | ) | 1.38 | 12.57 | ||||||||||||||||||||||||||||||
I(i) | 12.16 | (0.01 | ) | — | 0.52 | 0.51 | — | — | — | — | 0.51 | 12.67 | ||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.36 | 0.05 | — | 0.89 | 0.94 | (0.03 | ) | — | — | (0.03 | ) | 0.91 | 11.27 | |||||||||||||||||||||||||||||||
B | 10.34 | (0.01 | ) | — | 0.87 | 0.86 | (0.01 | ) | — | — | (0.01 | ) | 0.85 | 11.19 | ||||||||||||||||||||||||||||||
C | 10.33 | (0.01 | ) | — | 0.88 | 0.87 | (0.01 | ) | — | — | (0.01 | ) | 0.86 | 11.19 |
(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) | Commenced operations on December 22, 2006. | |
(g) | Not annualized. | |
(h) | Annualized. | |
(i) | Commenced operations on August 31, 2006. |
16
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||
17.06 | % | $ | 366,509 | 0.68 | % | 0.68 | % | 0.68 | % | 1.45 | % | 7 | % | |||||||||||||
16.13 | 95,176 | 1.51 | 1.44 | 1.44 | 0.70 | — | ||||||||||||||||||||
16.10 | 160,530 | 1.43 | 1.43 | 1.43 | 0.72 | — | ||||||||||||||||||||
17.47 | 2,335 | 0.28 | 0.28 | 0.28 | 1.70 | — | ||||||||||||||||||||
16.76 | 1,081 | 1.00 | 1.00 | 1.00 | 0.35 | — | ||||||||||||||||||||
16.96 | 10,597 | 0.61 | 0.61 | 0.61 | 1.22 | — | ||||||||||||||||||||
17.38 | 5,040 | 0.31 | 0.31 | 0.31 | 1.62 | — | ||||||||||||||||||||
(35.00 | ) | 329,312 | 0.59 | 0.59 | 0.59 | 1.06 | 13 | |||||||||||||||||||
(35.52 | ) | 89,717 | 1.41 | 1.41 | 1.41 | 0.26 | — | |||||||||||||||||||
(35.50 | ) | 148,584 | 1.34 | 1.34 | 1.34 | 0.34 | — | |||||||||||||||||||
(34.75 | ) | 1,310 | 0.23 | 0.23 | 0.23 | 0.97 | — | |||||||||||||||||||
(35.32 | ) | 49 | 1.06 | 1.06 | 1.06 | 0.34 | — | |||||||||||||||||||
(34.95 | ) | 4,825 | 0.59 | 0.59 | 0.59 | 0.17 | — | |||||||||||||||||||
(34.78 | ) | 2,917 | 0.30 | 0.30 | 0.30 | 0.63 | — | |||||||||||||||||||
19.35 | 503,345 | 0.60 | 0.60 | 0.60 | 0.93 | 39 | ||||||||||||||||||||
18.40 | 143,140 | 1.41 | 1.32 | 1.32 | 0.22 | — | ||||||||||||||||||||
18.44 | 238,997 | 1.34 | 1.31 | 1.31 | 0.25 | — | ||||||||||||||||||||
19.71 | 804 | 0.23 | 0.23 | 0.23 | 0.58 | — | ||||||||||||||||||||
14.85 | (g) | 53 | 0.95 | (h) | 0.93 | (h) | 0.93 | (h) | (0.26 | ) (h) | — | |||||||||||||||
15.25 | (g) | 325 | 0.66 | (h) | 0.65 | (h) | 0.65 | (h) | (0.01 | ) (h) | — | |||||||||||||||
15.49 | (g) | 782 | 0.38 | (h) | 0.38 | (h) | 0.38 | (h) | 0.25 | (h) | — | |||||||||||||||
13.64 | 370,088 | 0.69 | 0.67 | 0.67 | 0.49 | 13 | ||||||||||||||||||||
12.96 | 107,818 | 1.51 | 1.32 | 1.32 | (0.15 | ) | — | |||||||||||||||||||
12.96 | 181,434 | 1.44 | 1.32 | 1.32 | (0.16 | ) | — | |||||||||||||||||||
4.19 | (g) | 10 | 0.66 | (h) | 0.42 | (h) | 0.42 | (h) | 0.16 | (h) | — | |||||||||||||||
9.12 | 205,331 | 0.72 | 0.64 | 0.64 | 0.42 | 1 | ||||||||||||||||||||
8.37 | 65,739 | 1.53 | 1.29 | 1.29 | (0.23 | ) | — | |||||||||||||||||||
8.47 | 100,339 | 1.47 | 1.29 | 1.29 | (0.23 | ) | — |
17
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
18
19
Directors and Officers (Unaudited) — (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
20
21
U.S. Treasury* | 5.00 | % | ||
Other Direct Federal Obligations* | 1.00 | % | ||
Other Securities | 94.00 | % | ||
Total | 100.00 | % | ||
DRD† | 100.00 | % | ||
QDI‡ | 100.00 | % | ||
QII§ | 25.00 | % |
* | The income received from federal obligations. | |
† | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
‡ | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. | |
§ | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.174 | N/A | 0.190 | 0.364 | ||||||||||||
Class B | 0.084 | N/A | 0.190 | 0.274 | ||||||||||||
Class C | 0.089 | N/A | 0.190 | 0.279 | ||||||||||||
Class I | 0.215 | N/A | 0.190 | 0.405 | ||||||||||||
Class R3 | 0.153 | N/A | 0.190 | 0.343 | ||||||||||||
Class R4 | 0.188 | N/A | 0.190 | 0.378 | ||||||||||||
Class R5 | 0.213 | N/A | 0.190 | 0.403 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,191.50 | $ | 3.70 | $ | 1,000.00 | $ | 1,021.83 | $ | 3.41 | 0.67 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,186.00 | $ | 8.10 | $ | 1,000.00 | $ | 1,017.80 | $ | 7.48 | 1.47 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,186.30 | $ | 7.83 | $ | 1,000.00 | $ | 1,018.05 | $ | 7.22 | 1.42 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,193.80 | $ | 1.44 | $ | 1,000.00 | $ | 1,023.89 | $ | 1.33 | 0.26 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,190.50 | $ | 5.58 | $ | 1,000.00 | $ | 1,020.11 | $ | 5.14 | 1.01 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,191.30 | $ | 3.26 | $ | 1,000.00 | $ | 1,022.23 | $ | 3.01 | 0.59 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,193.00 | $ | 1.60 | $ | 1,000.00 | $ | 1,023.74 | $ | 1.48 | 0.29 | 184 | 365 |
23
24
25
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
26
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford High Yield Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
11 | ||||
12 | ||||
13 | ||||
14 | ||||
15 | ||||
28 | ||||
30 | ||||
31 | ||||
33 | ||||
33 | ||||
34 | ||||
35 | ||||
36 | ||||
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks high current income. Growth of capital is a secondary objective. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | 10 | ||||||||||
Year | Year | Year | ||||||||||
High Yield A# | 35.01 | % | 3.92 | % | 4.44 | % | ||||||
High Yield A## | 28.93 | % | 2.97 | % | 3.96 | % | ||||||
High Yield B# | 34.05 | % | 3.15 | % | NA* | |||||||
High Yield B## | 29.05 | % | 2.86 | % | NA* | |||||||
High Yield C# | 33.90 | % | 3.17 | % | 3.72 | % | ||||||
High Yield C## | 32.90 | % | 3.17 | % | 3.72 | % | ||||||
High Yield I# | 35.30 | % | 4.10 | % | 4.53 | % | ||||||
High Yield R3# | 34.68 | % | 3.98 | % | 4.67 | % | ||||||
High Yield R4# | 34.83 | % | 4.16 | % | 4.76 | % | ||||||
High Yield R5# | 35.11 | % | 4.29 | % | 4.82 | % | ||||||
High Yield Y# | 35.21 | % | 4.36 | % | 4.86 | % | ||||||
Barclays Capital U.S. Corporate | 47.96 | % | 6.11 | % | 6.50 | % | ||||||
High Yield Bond Index |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. | |
(5) | Class I shares commenced operations on 5/31/07. Performance prior to 5/31/07 reflects Class A performance. Classes R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. |
Portfolio Managers | ||
Mark Niland, CFA | James Serhant, CFA | |
Managing Director | Senior Vice President, Senior Investment Analyst |
2
as of October 31, 2009
Percentage of | ||||
Long-Term | ||||
Rating | Holdings | |||
BBB | 3.5 | % | ||
BB | 24.4 | |||
B | 34.7 | |||
CCC | 29.0 | |||
CC | 3.8 | |||
C | 0.2 | |||
D | 4.4 | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
Category | Net Assets | |||
Asset & Commercial Mortgage Backed Securities | 0.0 | % | ||
Corporate Bonds: Investment Grade | 1.1 | |||
Corporate Bonds: Non-Investment Grade | 87.9 | |||
Preferred Stocks | 0.0 | |||
Senior Floating Rate Interests: Investment Grade | 1.9 | |||
Senior Floating Rate Interests: Non-Investment Grade | 7.2 | |||
Short-Term Investments | 1.4 | |||
Other Assets and Liabilities | 0.5 | |||
Total | 100.0 | % | ||
3
as of October 31, 2009
Percentage of | ||||
Industry | Net Assets | |||
Fixed Income Securities | ||||
Accommodation and Food Services | 2.5 | % | ||
Administrative Waste Management and Remediation | 1.2 | |||
Agriculture, Forestry, Fishing and Hunting | 2.4 | |||
Air Transportation | 1.1 | |||
Apparel Manufacturing | 1.7 | |||
Arts, Entertainment and Recreation | 8.5 | |||
Beverage and Tobacco Product Manufacturing | 0.3 | |||
Chemical Manufacturing | 1.5 | |||
Computer and Electronic Product Manufacturing | 1.7 | |||
Construction | 1.5 | |||
Electrical Equipment, Appliance Manufacturing | 0.4 | |||
Fabricated Metal Product Manufacturing | 0.6 | |||
Finance and Insurance | 10.8 | |||
Food Manufacturing | 1.3 | |||
Furniture and Related Product Manufacturing | 0.5 | |||
Health Care and Social Assistance | 8.5 | |||
Information | 14.1 | |||
Machinery Manufacturing | 0.3 | |||
Mining | 1.4 | |||
Miscellaneous Manufacturing | 1.0 | |||
Motor Vehicle & Parts Manufacturing | 5.4 | |||
Paper Manufacturing | 2.3 | |||
Petroleum and Coal Products Manufacturing | 6.6 | |||
Pipeline Transportation | 1.6 | |||
Plastics and Rubber Products Manufacturing | 1.1 | |||
Primary Metal Manufacturing | 0.9 | |||
Printing and Related Support Activities | 0.8 | |||
Professional, Scientific and Technical Services | 2.9 | |||
Public Administration | 0.3 | |||
Real Estate and Rental and Leasing | 1.6 | |||
Retail Trade | 5.4 | |||
Soap, Cleaning Compound, and Toilet Manufacturing | 0.2 | |||
Textile Product Mills | 0.8 | |||
Utilities | 5.7 | |||
Water Transportation | 0.8 | |||
Wholesale Trade | 0.4 | |||
Other Securities | ||||
Banks | 0.0 | |||
Short-Term Investments | 1.4 | |||
Other Assets and Liabilities | 0.5 | |||
Total | 100.0 | % | ||
4
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES — 0.0% | ||||||||
Finance and Insurance — 0.0% | ||||||||
Soundview NIM Trust | ||||||||
$ | 920 | 8.25%, 12/25/2036 ⌂• | $ | — | ||||
Total asset & commercial mortgage backed Securities (cost $915) | $ | — | ||||||
CORPORATE BONDS: INVESTMENT GRADE — 1.1% | ||||||||
Apparel Manufacturing — 0.4% | ||||||||
Phillips Van-Heusen Corp. | ||||||||
$ | 1,545 | 7.75%, 11/15/2023 ‡ | $ | 1,388 | ||||
Finance and Insurance — 0.7% | ||||||||
Goldman Sachs Capital Trust II | ||||||||
3,000 | 5.79%, 06/01/2012 ‡♠Δ | 2,231 | ||||||
Total corporate bonds: investment grade (cost $2,814) | $ | 3,619 | ||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 87.9% | ||||||||
Accommodation and Food Services — 2.5% | ||||||||
Ameristar Casinos, Inc. | ||||||||
$ | 1,215 | 9.25%, 06/01/2014 ■ | $ | 1,264 | ||||
Harrah’s Operating Co., Inc. | ||||||||
1,855 | 11.25%, 06/01/2017 ■ | 1,892 | ||||||
MGM Mirage, Inc. | ||||||||
1,965 | 11.13%, 11/15/2017 ■ | 2,161 | ||||||
2,040 | 11.38%, 03/01/2018 ■ | 1,836 | ||||||
MTR Gaming Group, Inc. | ||||||||
950 | 12.63%, 07/15/2014 ■ | 931 | ||||||
8,084 | ||||||||
Administrative Waste Management and Remediation — 1.2% | ||||||||
Iron Mountain, Inc. | ||||||||
1,225 | 7.75%, 01/15/2015 | 1,240 | ||||||
Sabre Holdings Corp. | ||||||||
1,290 | 8.35%, 03/15/2016 | 1,152 | ||||||
West Corp. | ||||||||
1,550 | 9.50%, 10/15/2014 | 1,550 | ||||||
3,942 | ||||||||
Agriculture, Forestry, Fishing and Hunting — 2.4% | ||||||||
ASG Consoloidated Finance LLC | ||||||||
4,210 | 11.50%, 11/01/2011 | 4,115 | ||||||
Dole Food Co., Inc. | ||||||||
1,095 | 13.88%, 03/15/2014 ■ | 1,281 | ||||||
Tyson Foods, Inc. | ||||||||
1,115 | 10.50%, 03/01/2014 | 1,271 | ||||||
Weyerhaeuser Co. | ||||||||
1,470 | 7.38%, 03/15/2032 | 1,349 | ||||||
8,016 | ||||||||
Air Transportation — 1.1% | ||||||||
Bristow Group, Inc. | ||||||||
1,340 | 7.50%, 09/15/2017 | 1,290 | ||||||
Continental Airlines, Inc. | ||||||||
1,442 | 7.37%, 12/15/2015 | 1,226 | ||||||
Global Aviation Holdings Ltd. | ||||||||
1,275 | 14.00%, 08/15/2013 ■ | 1,262 | ||||||
3,778 | ||||||||
Apparel Manufacturing — 1.3% | ||||||||
Levi Strauss & Co. | ||||||||
1,075 | 9.75%, 01/15/2015 | 1,124 | ||||||
Quiksilver, Inc. | ||||||||
4,135 | 6.88%, 04/15/2015 | 3,194 | ||||||
4,318 | ||||||||
Arts, Entertainment and Recreation — 6.5% | ||||||||
AMC Entertainment, Inc. | ||||||||
325 | 11.00%, 02/01/2016 | 341 | ||||||
Cenveo, Inc. | ||||||||
1,400 | 10.50%, 08/15/2016 ■ | 1,376 | ||||||
Echostar DBS Corp. | ||||||||
1,230 | 7.75%, 05/31/2015 | 1,258 | ||||||
FireKeepers Development Authority | ||||||||
3,870 | 13.88%, 05/01/2015 ■ | 4,180 | ||||||
First Data Corp. | ||||||||
4,981 | 10.55%, 09/24/2015 | 4,457 | ||||||
Marquee Holdings, Inc. | ||||||||
1,725 | 9.51%, 08/15/2014 | 1,434 | ||||||
Sirius Satellite Radio, Inc. | ||||||||
1,365 | 9.63%, 08/01/2013 | 1,246 | ||||||
TL Acquisitions, Inc. | ||||||||
1,915 | 13.25%, 07/15/2015 ■ | 1,800 | ||||||
Universal City Development Partners Ltd. | ||||||||
1,639 | 10.88%, 11/15/2016 ■☼ | 1,639 | ||||||
Virgin Media Finance plc | ||||||||
1,150 | 9.50%, 08/15/2016 | 1,216 | ||||||
Virgin Media, Inc. | ||||||||
2,290 | 6.50%, 11/15/2016 ۞■ | 2,421 | ||||||
21,368 | ||||||||
Beverage and Tobacco Product Manufacturing — 0.3% | ||||||||
Constellation Brands, Inc. | ||||||||
1,000 | 8.38%, 12/15/2014 | 1,055 | ||||||
Chemical Manufacturing — 1.3% | ||||||||
Hexion Specialty Chemicals | ||||||||
1,450 | 9.75%, 11/15/2014 | 1,233 | ||||||
Huntsman International LLC | ||||||||
1,390 | 7.38%, 01/01/2015 | 1,279 | ||||||
Nalco Co. | ||||||||
1,045 | 8.88%, 11/15/2013 | 1,076 | ||||||
Potlatch Corp. | ||||||||
650 | 12.50%, 12/01/2009 ⌂Δ | 650 | ||||||
4,238 | ||||||||
Computer and Electronic Product Manufacturing — 1.0% | ||||||||
Nextel Communications, Inc. | ||||||||
1,500 | 7.38%, 08/01/2015 | 1,329 | ||||||
Seagate Technology International | ||||||||
1,755 | 10.00%, 05/01/2014 ■ | 1,948 | ||||||
3,277 | ||||||||
Construction — 1.5% | ||||||||
Beazer Homes USA, Inc. | ||||||||
1,100 | 8.38%, 04/15/2012 | 946 | ||||||
D.R. Horton, Inc. | ||||||||
1,425 | 6.13%, 01/15/2014 | 1,389 | ||||||
Lennar Corp. | ||||||||
1,325 | 5.60%, 05/31/2015 | 1,213 | ||||||
Pulte Homes, Inc. | ||||||||
1,355 | 7.88%, 06/15/2032 | 1,260 | ||||||
4,808 | ||||||||
5
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 87.9% — (continued) | ||||||||
Electrical Equipment, Appliance Manufacturing — 0.4% | ||||||||
General Cable Corp. | ||||||||
$ | 1,275 | 7.13%, 04/01/2017 | $ | 1,230 | ||||
Fabricated Metal Product Manufacturing — 0.6% | ||||||||
Crown Americas, Inc. | ||||||||
1,900 | 7.63%, 05/15/2017 ■ | 1,948 | ||||||
Finance and Insurance — 9.7% | ||||||||
American General Finance Corp. | ||||||||
7,350 | 6.90%, 12/15/2017 | 5,115 | ||||||
Bank of America Capital II | ||||||||
1,835 | 8.00%, 12/15/2026 | 1,771 | ||||||
Citigroup, Inc. | ||||||||
1,800 | 8.30%, 12/21/2057 ‡Δ | 1,665 | ||||||
Developers Diversified Realty Corp. | ||||||||
1,300 | 9.63%, 03/15/2016 | 1,320 | ||||||
Ford Motor Credit Co. | ||||||||
3,810 | 12.00%, 05/15/2015 | 4,291 | ||||||
GMAC LLC | ||||||||
1,200 | 7.00%, 02/01/2012 ■ | 1,146 | ||||||
3,800 | 8.00%, 11/01/2031 ■ | 3,249 | ||||||
Host Hotels & Resorts L.P. | ||||||||
1,200 | 9.00%, 05/15/2017 ■ | 1,284 | ||||||
Hub International Holdings, Inc. | ||||||||
1,190 | 9.00%, 12/15/2014 ■ | 1,136 | ||||||
Janus Capital Group, Inc. | ||||||||
1,285 | 6.95%, 06/15/2017 | 1,221 | ||||||
Leucadia National Corp. | ||||||||
1,650 | 7.13%, 03/15/2017 | 1,559 | ||||||
Liberty Mutual Group, Inc. | ||||||||
1,350 | 10.75%, 06/15/2058 ■ | 1,418 | ||||||
LPL Holdings, Inc. | ||||||||
4,935 | 10.75%, 12/15/2015 ■ | 4,997 | ||||||
NB Capital Trust IV | ||||||||
500 | 8.25%, 04/15/2027 | 490 | ||||||
Starwood Hotels & Resorts | ||||||||
1,200 | 7.88%, 10/15/2014 | 1,242 | ||||||
31,904 | ||||||||
Food Manufacturing — 0.4% | ||||||||
Smithfield Foods, Inc. | ||||||||
1,185 | 10.00%, 07/15/2014 ■ | 1,244 | ||||||
Furniture and Related Product Manufacturing — 0.5% | ||||||||
Masco Corp. | ||||||||
1,840 | 7.75%, 08/01/2029 | 1,750 | ||||||
Health Care and Social Assistance — 7.1% | ||||||||
Biomet, Inc. | ||||||||
1,160 | 10.38%, 10/15/2017 | 1,248 | ||||||
HCA, Inc. | ||||||||
1,575 | 7.50%, 11/15/2095 | 1,171 | ||||||
4,539 | 7.88%, 02/01/2011 | 4,630 | ||||||
825 | 8.36%, 04/15/2024 | 758 | ||||||
1,655 | 9.25%, 11/15/2016 | 1,730 | ||||||
HealthSouth Corp. | ||||||||
1,150 | 10.75%, 06/15/2016 | 1,248 | ||||||
IASIS Healthcare Capital Corp. | ||||||||
1,280 | 8.75%, 06/15/2014 | 1,312 | ||||||
Inverness Medical Innovation, Inc. | ||||||||
1,250 | 9.00%, 05/15/2016 | 1,269 | ||||||
Multiplan Corp. | ||||||||
1,905 | 10.38%, 04/15/2016 ■ | 1,829 | ||||||
Psychiatric Solutions, Inc. | ||||||||
1,290 | 7.75%, 07/15/2015 | 1,270 | ||||||
Reable Therapeutics Finance LLC | ||||||||
1,555 | 11.75%, 11/15/2014 | 1,555 | ||||||
Rite Aid Corp. | ||||||||
1,795 | 6.88%, 12/15/2028 ■ | 987 | ||||||
2,450 | 7.70%, 02/15/2027 | 1,397 | ||||||
975 | 10.25%, 10/15/2019 ■ | 980 | ||||||
Skilled Healthcare Group, Inc. | ||||||||
840 | 11.00%, 01/15/2014 | 874 | ||||||
Warner Chilcott Corp. | ||||||||
1,215 | 8.75%, 02/01/2015 | 1,257 | ||||||
23,515 | ||||||||
Information — 13.3% | ||||||||
Canwest MediaWorks L.P. | ||||||||
1,800 | 9.25%, 08/01/2015 ■• | 360 | ||||||
Charter Communications Operating LLC | ||||||||
3,890 | 10.00%, 04/30/2012 ■Ψ | 3,948 | ||||||
2,960 | 12.88%, 09/15/2014 ■Ψ | 3,271 | ||||||
Citizens Communications Co. | ||||||||
2,445 | 7.88%, 01/15/2027 | 2,243 | ||||||
CSC Holdings, Inc. | ||||||||
2,075 | 8.50%, 04/15/2014 ■ | 2,192 | ||||||
Intelsat Jackson Holdings Ltd. | ||||||||
5,305 | 11.50%, 06/15/2016 | 5,570 | ||||||
Lender Process Services | ||||||||
1,200 | 8.13%, 07/01/2016 | 1,263 | ||||||
Level 3 Financing, Inc. | ||||||||
1,500 | 8.75%, 02/15/2017 | 1,283 | ||||||
3,900 | 12.25%, 03/15/2013 | 4,066 | ||||||
MetroPCS Wireless, Inc. | ||||||||
1,225 | 9.25%, 11/01/2014 | 1,234 | ||||||
Qwest Corp. | ||||||||
5,431 | 7.25%, 10/15/2035 | 4,508 | ||||||
Sprint Capital Corp. | ||||||||
4,495 | 8.38%, 03/15/2012 | 4,551 | ||||||
3,460 | 8.75%, 03/15/2032 | 2,993 | ||||||
Videotron Ltee | ||||||||
1,300 | 9.13%, 04/15/2018 ■ | 1,407 | ||||||
Wind Acquisition Finance S.A. | ||||||||
1,413 | 10.75%, 12/01/2015 ■ | 1,526 | ||||||
1,380 | 11.75%, 07/15/2017 ■ | 1,559 | ||||||
Windstream Corp. | ||||||||
1,740 | 8.63%, 08/01/2016 | 1,788 | ||||||
43,762 | ||||||||
Machinery Manufacturing — 0.3% | ||||||||
Case New Holland, Inc. | ||||||||
1,100 | 7.75%, 09/01/2013 ■ | 1,092 | ||||||
Mining — 1.4% | ||||||||
Drummond Co., Inc. | ||||||||
1,330 | 9.00%, 10/15/2014 ■ | 1,343 | ||||||
James River Coal Co. | ||||||||
1,300 | 9.38%, 06/01/2012 | 1,274 |
6
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 87.9% — (continued) | ||||||||
Mining — 1.4% — (continued) | ||||||||
Teck Resources Ltd. | ||||||||
$ | 1,585 | 10.75%, 05/15/2019 | $ | 1,847 | ||||
4,464 | ||||||||
Miscellaneous Manufacturing — 1.0% | ||||||||
L-3 Communications Corp. | ||||||||
1,620 | 6.13%, 01/15/2014 | 1,604 | ||||||
Transdigm, Inc. | ||||||||
1,265 | 7.75%, 07/15/2014 | 1,271 | ||||||
570 | 7.75%, 07/15/2014 ■ | 573 | ||||||
3,448 | ||||||||
Motor Vehicle & Parts Manufacturing — 3.0% | ||||||||
ESCO Corp. | ||||||||
1,425 | 8.63%, 12/15/2013 ■ | 1,407 | ||||||
Ford Motor Co. | ||||||||
1,550 | 9.22%, 09/15/2021 | 1,310 | ||||||
Tenneco, Inc. | ||||||||
2,450 | 8.63%, 11/15/2014 | 2,309 | ||||||
TRW Automotive, Inc. | ||||||||
1,750 | 7.00%, 03/15/2014 ■ | 1,627 | ||||||
UCI Holdco, Inc. | ||||||||
5,915 | 9.25%, 12/15/2013 Δ | 3,076 | ||||||
9,729 | ||||||||
Paper Manufacturing — 2.3% | ||||||||
Appleton Papers, Inc. | ||||||||
1,762 | 11.25%, 12/15/2015 ■ | 1,484 | ||||||
Domtar Corp. | ||||||||
1,135 | 10.75%, 06/01/2017 | 1,302 | ||||||
Georgia-Pacific LLC | ||||||||
1,275 | 7.00%, 01/15/2015 ■ | 1,288 | ||||||
1,190 | 8.25%, 05/01/2016 ■ | 1,261 | ||||||
NewPage Corp. | ||||||||
950 | 11.38%, 12/31/2014 ■ | 948 | ||||||
Westvaco Corp. | ||||||||
1,138 | 8.20%, 01/15/2030 ‡ | 1,140 | ||||||
7,423 | ||||||||
Petroleum and Coal Products Manufacturing — 6.3% | ||||||||
Alon Refining Krotz Springs, Inc. | ||||||||
1,135 | 13.50%, 10/15/2014 ■ | 1,073 | ||||||
Bill Barrett Corp. | ||||||||
1,495 | 9.88%, 07/15/2016 | 1,585 | ||||||
Chesapeake Energy Corp. | ||||||||
970 | 7.00%, 08/15/2014 | 977 | ||||||
2,340 | 9.50%, 02/15/2015 | 2,533 | ||||||
Ferrellgas Partners L.P. | ||||||||
1,235 | 9.13%, 10/01/2017 ■ | 1,291 | ||||||
Headwaters, Inc. | ||||||||
945 | 11.38%, 11/01/2014 ■ | 947 | ||||||
Linn Energy LLC | ||||||||
1,565 | 11.75%, 05/15/2017 ■ | 1,739 | ||||||
Opti Canada, Inc. | ||||||||
1,985 | 8.25%, 12/15/2014 | 1,558 | ||||||
Petrohawk Energy Corp. | ||||||||
1,825 | 9.13%, 07/15/2013 | 1,889 | ||||||
Plains Exploration & Production Co. | ||||||||
1,475 | 10.00%, 03/01/2016 | 1,578 | ||||||
Sandridge Energy, Inc. | ||||||||
1,170 | 9.88%, 05/15/2016 ■ | 1,252 | ||||||
Star Gas Partners L.P. | ||||||||
945 | 10.25%, 02/15/2013 | 954 | ||||||
Targa Resources Partners | ||||||||
1,625 | 11.25%, 07/15/2017 ■ | 1,739 | ||||||
Western Refining, Inc. | ||||||||
1,590 | 11.25%, 06/15/2017 ■ | 1,471 | ||||||
20,586 | ||||||||
Pipeline Transportation — 1.6% | ||||||||
Dynegy Holdings, Inc. | ||||||||
1,450 | 7.75%, 06/01/2019 | 1,222 | ||||||
El Paso Corp. | ||||||||
1,545 | 7.75%, 01/15/2032 | 1,446 | ||||||
1,065 | 7.80%, 08/01/2031 | 998 | ||||||
MarkWest Energy | ||||||||
1,595 | 8.75%, 04/15/2018 | 1,631 | ||||||
5,297 | ||||||||
Plastics and Rubber Products Manufacturing — 1.1% | ||||||||
Goodyear Tire & Rubber Co. | ||||||||
1,725 | 5.01%, 12/01/2009 Δ | 1,724 | ||||||
Plastipak Holdings, Inc. | ||||||||
875 | 10.63%, 08/15/2019 ■ | 958 | ||||||
Solo Cup Co. | ||||||||
1,000 | 8.50%, 02/15/2014 | 973 | ||||||
3,655 | ||||||||
Primary Metal Manufacturing — 0.9% | ||||||||
Novelis, Inc. | ||||||||
825 | 7.25%, 02/15/2015 | 740 | ||||||
645 | 11.50%, 02/15/2015 ■ | 671 | ||||||
Steel Dynamics, Inc. | ||||||||
1,405 | 8.25%, 04/15/2016 ■ | 1,412 | ||||||
2,823 | ||||||||
Printing and Related Support Activities — 0.8% | ||||||||
Harland Clarke Holdings | ||||||||
1,550 | 9.50%, 05/15/2015 | 1,414 | ||||||
Sheridan Group, Inc. | ||||||||
1,475 | 10.25%, 08/15/2011 | 1,298 | ||||||
2,712 | ||||||||
Professional, Scientific and Technical Services — 2.9% | ||||||||
Affinion Group, Inc. | ||||||||
750 | 10.13%, 10/15/2013 | 769 | ||||||
6,780 | 11.50%, 10/15/2015 | 7,085 | ||||||
SunGard Data Systems, Inc. | ||||||||
1,693 | 10.25%, 08/15/2015 | 1,746 | ||||||
9,600 | ||||||||
Public Administration — 0.3% | ||||||||
Corrections Corp. of America | ||||||||
1,165 | 6.25%, 03/15/2013 | 1,159 | ||||||
Real Estate and Rental and Leasing — 1.6% | ||||||||
American Real Estate Partners L.P. | ||||||||
1,405 | 7.13%, 02/15/2013 ‡ | 1,381 | ||||||
Ashtead Capital, Inc. | ||||||||
1,650 | 9.00%, 08/15/2016 ■ | 1,625 | ||||||
Hertz Corp. | ||||||||
1,550 | 8.88%, 01/01/2014 | 1,569 | ||||||
Realogy Corp. | ||||||||
835 | 10.50%, 04/15/2014 | 597 | ||||||
5,172 | ||||||||
7
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 87.9% — (continued) | ||||||||
Retail Trade — 5.4% | ||||||||
Dollar General Corp. | ||||||||
$ | 1,425 | 11.88%, 07/15/2017 | $ | 1,596 | ||||
Dollarama Group L.P. | ||||||||
1,440 | 8.88%, 08/15/2012 | 1,504 | ||||||
J.C. Penney Co., Inc. | ||||||||
1,780 | 7.63%, 03/01/2097 | 1,384 | ||||||
Macys, Inc. | ||||||||
3,250 | 6.90%, 04/01/2029 | 2,681 | ||||||
Michaels Stores, Inc. | ||||||||
1,400 | 11.38%, 11/01/2016 | 1,354 | ||||||
Nebraska Book Co., Inc. | ||||||||
1,600 | 10.00%, 12/01/2011 ■ | 1,612 | ||||||
New Albertson’s, Inc. | ||||||||
2,425 | 8.00%, 05/01/2031 | 2,207 | ||||||
Toys R Us, Inc. | ||||||||
1,680 | 7.88%, 04/15/2013 | 1,634 | ||||||
United Components, Inc. | ||||||||
2,320 | 9.38%, 06/15/2013 | 2,198 | ||||||
Yankee Acquisition Corp. | ||||||||
1,500 | 8.50%, 02/15/2015 | 1,433 | ||||||
17,603 | ||||||||
Soap, Cleaning Compound, and Toilet Manufacturing — 0.2% | ||||||||
Johnson Diversey, Inc. | ||||||||
275 | 9.63%, 05/15/2012 | 279 | ||||||
550 | 10.67%, 05/15/2013 | 558 | ||||||
837 | ||||||||
Textile Product Mills — 0.8% | ||||||||
Interface, Inc. | ||||||||
1,300 | 11.38%, 11/01/2013 ■ | 1,404 | ||||||
Mohawk Industries, Inc. | ||||||||
1,235 | 6.88%, 01/15/2016 | 1,210 | ||||||
2,614 | ||||||||
Utilities — 5.7% | ||||||||
AES Corp. | ||||||||
2,120 | 9.75%, 04/15/2016 ■ | 2,311 | ||||||
Calpine Corp. | ||||||||
2,080 | 7.25%, 10/15/2017 ■ | 1,960 | ||||||
Energy Future Holdings Corp. | ||||||||
4,550 | 11.25%, 11/01/2017 | 2,958 | ||||||
Mirant Americas Generation LLC | ||||||||
2,495 | 8.30%, 05/01/2011 | 2,539 | ||||||
Mirant North America LLC | ||||||||
1,935 | 7.38%, 12/31/2013 | 1,906 | ||||||
NRG Energy, Inc. | ||||||||
1,620 | 7.25%, 02/01/2014 | 1,608 | ||||||
2,380 | 8.50%, 06/15/2019 | 2,410 | ||||||
Orion Power Holdings, Inc. | ||||||||
2,200 | 12.00%, 05/01/2010 | 2,271 | ||||||
Reliant Energy, Inc. | ||||||||
805 | 9.24%, 07/02/2017 | 861 | ||||||
18,824 | ||||||||
Water Transportation — 0.8% | ||||||||
Royal Caribbean Cruises Ltd. | ||||||||
1,125 | 11.88%, 07/15/2015 | 1,263 | ||||||
Ship Finance International Ltd. | ||||||||
1,305 | 8.50%, 12/15/2013 | 1,240 | ||||||
2,503 | ||||||||
Wholesale Trade — 0.4% | ||||||||
SGS International, Inc. | ||||||||
1,350 | 12.00%, 12/15/2013 | 1,282 | ||||||
Total corporate bonds: non-investment grade (cost $265,461) | $ | 289,060 | ||||||
SENIOR FLOATING RATE INTERESTS: INVESTMENT GRADE♦ — 1.9% | ||||||||
Food Manufacturing — 0.9% | ||||||||
WM Wrigley Jr. Co. | ||||||||
$ | 2,808 | 6.50%, 10/06/2014 ±☼ | $ | 2,840 | ||||
Health Care and Social Assistance — 1.0% | ||||||||
Fresenius SE, Term Loan B | ||||||||
1,972 | 6.75%, 09/10/2014 ±☼ | 1,983 | ||||||
Fresenius SE, Term Loan B2 | ||||||||
1,294 | 6.75%, 09/10/2014 ±☼ | 1,302 | ||||||
3,285 | ||||||||
Total senior floating rate interests: investment Grade (cost $6,108) | $ | 6,125 | ||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE♦ — 7.2% | ||||||||
Arts, Entertainment and Recreation — 2.0% | ||||||||
Chester Downs and Marina LLC | ||||||||
$ | 825 | 12.38%, 07/31/2016 ±☼ | $ | 820 | ||||
Marquee Holdings, Inc. | ||||||||
6,378 | 5.30%, 06/13/2012 ± | 5,708 | ||||||
6,528 | ||||||||
Chemical Manufacturing — 0.2% | ||||||||
Lyondell Chemical Co. | ||||||||
520 | 9.17%, 02/03/2010 ±☼Ψ | 535 | ||||||
Computer and Electronic Product Manufacturing — 0.7% | ||||||||
Freescale Semiconductor, Inc. | ||||||||
1,261 | 12.50%, 12/15/2014 ± | 1,288 | ||||||
Infor Lux Bond Co. | ||||||||
2,822 | 8.25%, 09/02/2014 ±☼ | 959 | ||||||
2,247 | ||||||||
Finance and Insurance — 0.4% | ||||||||
Nuveen Investments, Inc. | ||||||||
1,415 | 12.50%, 07/31/2015 ± | 1,441 | ||||||
Health Care and Social Assistance — 0.4% | ||||||||
IASIS Healthcare Capital Corp. | ||||||||
1,502 | 5.53%, 06/13/2014 ± | 1,337 | ||||||
Information — 0.8% | ||||||||
Level 3 Communications Corp. | ||||||||
615 | 8.50%, 03/13/2014 ± | 652 | ||||||
WideOpenWest Finance LLC | ||||||||
2,755 | 7.30%, 06/29/2015 ±☼ | 2,108 | ||||||
2,760 | ||||||||
8
Shares or Principal Amount | Market Value ╪ | |||||||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE♦ — 7.2% — (continued) | ||||||||||||
Motor Vehicle & Parts Manufacturing — 2.4% | ||||||||||||
Lear Corp. | ||||||||||||
$ | 5,987 | 5.50%, 04/25/2012 ◊Ω | $ | 5,754 | ||||||||
1,401 | 12.25%, 08/10/2010 ±Ω | 1,401 | ||||||||||
Lear Corp., Delayed Delivery Term Loan B | ||||||||||||
335 | 5.50%, 10/21/2014 ◊☼Ψ | 337 | ||||||||||
Lear Corp., Term Loan B | ||||||||||||
335 | 5.50%, 10/21/2014 ◊☼Ψ | 337 | ||||||||||
7,829 | ||||||||||||
Petroleum and Coal Products Manufacturing — 0.3% | ||||||||||||
Turbo Beta Ltd. | ||||||||||||
1,278 | 14.50%, 03/12/2018 ±⌂† | 895 | ||||||||||
Total senior floating rate interests: non-investment grade (cost $21,611) | $ | 23,572 | ||||||||||
PREFERRED STOCKS — 0.0% | ||||||||||||
Banks — 0.0% | ||||||||||||
52 | Federal National Mortgage Association, 8.25% • | $ | 60 | |||||||||
Total preferred stocks (cost $668) | $ | 60 | ||||||||||
Total long-term investments (cost $297,577) | $ | 322,436 | ||||||||||
SHORT-TERM INVESTMENTS — 1.4% | ||||||||||||
Investment Pools and Funds — 1.4% | ||||||||||||
4,518 | JP Morgan U.S. Government Money Market Fund | $ | 4,518 | |||||||||
— | State Street Bank U.S. Government Money Market Fund | — | ||||||||||
— | Wells Fargo Advantage Government Money Market Fund | — | ||||||||||
4,518 | ||||||||||||
Total short-term investments (cost $4,518) | $ | 4,518 | ||||||||||
Total investments (cost $302,095) ▲ | 99.5 | % | $ | 326,954 | ||||||||
Other assets and liabilities | 0.5 | % | 1,659 | |||||||||
Total net assets | 100.0 | % | $ | 328,613 | ||||||||
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 4.6% of total net assets at October 31, 2009. | |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $303,132 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 29,791 | ||
Unrealized Depreciation | (5,969 | ) | ||
Net Unrealized Appreciation | $ | 23,822 | ||
† | 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 October 31, 2009, was $895, which represents 0.27% 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 October 31, 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 October 31, 2009, was $90,960, which represents 27.68% of total net assets. | |
♠ | Perpetual maturity security. Maturity date shown is the first call date. | |
۞ | Convertible security. | |
☼ | The cost of securities purchased on a when-issued or delayed delivery basis at October 31, 2009 was $6,874. | |
± | The interest rate disclosed for these securities represents the average coupon as of October 31, 2009. | |
◊ | The interest rate disclosed for these securities represents an estimated average coupon as of October 31, 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. | |
♦ | Senior loans 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. |
9
October 31, 2009
(000’s Omitted)
⌂ | 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 | |||||||
05/2001 – 11/2001 | $ | 650 | Potlatch Corp., 12.50%, 12/01/2009 | $ | 645 | |||||
02/2007 | $ | 920 | Soundview NIM Trust, 8.25%, 12/25/2036 – 144A | 915 | ||||||
06/2008 – 05/2009 | $ | 1,278 | Turbo Beta Ltd., 14.50%, 03/12/2018 | 1,278 |
The aggregate value of these securities at October 31, 2009 was $1,545 which represents 0.47% of total net assets. | ||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
10
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Asset & Commercial Mortgage Backed Securities | $ | — | $ | — | $ | — | $ | — | ||||||||
Corporate Bonds: Investment Grade | 3,619 | — | 3,619 | — | ||||||||||||
Corporate Bonds: Non-Investment Grade | 289,060 | — | 287,834 | 1,226 | ||||||||||||
Preferred Stocks ‡ | 60 | 60 | — | — | ||||||||||||
Senior Floating Rate Interests: Investment Grade | 6,125 | — | 6,125 | — | ||||||||||||
Senior Floating Rate Interests: Non-Investment Grade | 23,572 | — | 22,677 | 895 | ||||||||||||
Short-Term Investments | 4,518 | 4,518 | — | — | ||||||||||||
Total | $ | 326,954 | $ | 4,578 | $ | 320,255 | $ | 2,121 | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. |
Change in | ||||||||||||||||||||||||
Balance as of | Unrealized | Transfers In | Balance as of | |||||||||||||||||||||
October 31, | Realized Gain | Appreciation | Net Purchases | and/or Out of | October 31, | |||||||||||||||||||
2008 | (Loss) | (Depreciation) | (Sales) | Level 3 | 2009 | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Asset & Commercial Mortgage Backed Securities | 641 | (346 | ) | (74 | )* | (221 | ) | — | — | |||||||||||||||
Common Stock | — | (21 | ) | 21 | † | — | — | — | ||||||||||||||||
Corporate Bonds and Senior Floating Rate Interests | 4,098 | (253 | ) | 420 | ‡ | 210 | (2,354 | ) | 2,121 | |||||||||||||||
Total | $ | 4,739 | $ | (620 | ) | $ | 367 | $ | (11 | ) | $ | (2,354 | ) | $ | 2,121 | |||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $(4). | |
† | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $—. | |
‡ | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $(19). |
11
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $302,095) | $ | 326,954 | ||
Foreign currency on deposit with custodian (cost $—) | — | |||
Receivables: | ||||
Investment securities sold | 8,290 | |||
Fund shares sold | 739 | |||
Dividends and interest | 8,001 | |||
Other assets | 299 | |||
Total assets | 344,283 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 11,327 | |||
Fund shares redeemed | 3,709 | |||
Investment management fees | 38 | |||
Dividends | 473 | |||
Distribution fees | 21 | |||
Accrued expenses | 75 | |||
Other liabilities | 27 | |||
Total liabilities | 15,670 | |||
Net assets | $ | 328,613 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 401,638 | |||
Accumulated undistributed net investment income | 428 | |||
Accumulated net realized loss on investments and foreign currency transactions | (98,312 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 24,859 | |||
Net assets | $ | 328,613 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 6.73/$7.05 | ||
Shares outstanding | 30,058 | |||
Net assets | $ | 202,256 | ||
Class B: Net asset value per share | $ | 6.71 | ||
Shares outstanding | 3,391 | |||
Net assets | $ | 22,749 | ||
Class C: Net asset value per share | $ | 6.71 | ||
Shares outstanding | 7,712 | |||
Net assets | $ | 51,777 | ||
Class I: Net asset value per share | $ | 6.74 | ||
Shares outstanding | 307 | |||
Net assets | $ | 2,068 | ||
Class R3: Net asset value per share | $ | 6.73 | ||
Shares outstanding | 25 | |||
Net assets | $ | 166 | ||
Class R4: Net asset value per share | $ | 6.73 | ||
Shares outstanding | 3 | |||
Net assets | $ | 18 | ||
Class R5: Net asset value per share | $ | 6.73 | ||
Shares outstanding | 2 | |||
Net assets | $ | 11 | ||
Class Y: Net asset value per share | $ | 6.73 | ||
Shares outstanding | 7,363 | |||
Net assets | $ | 49,568 | ||
12
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Interest | $ | 27,074 | ||
Securities lending | 24 | |||
Total investment income | 27,098 | |||
Expenses: | ||||
Investment management fees | 1,676 | |||
Administrative services fees | — | |||
Transfer agent fees | 533 | |||
Distribution fees | ||||
Class A | 383 | |||
Class B | 192 | |||
Class C | 346 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 11 | |||
Accounting services fees | 43 | |||
Registration and filing fees | 94 | |||
Board of Directors’ fees | 7 | |||
Audit fees | 11 | |||
Other expenses | 45 | |||
Total expenses (before waivers and fees paid indirectly) | 3,341 | |||
Expense waivers | (300 | ) | ||
Transfer agent fee waivers | (18 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (318 | ) | ||
Total expenses, net | 3,023 | |||
Net Investment Income | 24,075 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (19,289 | ) | ||
Net realized gain on futures | 1,461 | |||
Net realized loss on forward foreign currency contracts | (134 | ) | ||
Net realized gain on other foreign currency transactions | 75 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (17,887 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 76,682 | |||
Net unrealized depreciation of futures | (263 | ) | ||
Net unrealized appreciation of forward foreign currency contracts | 18 | |||
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 | 76,444 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 58,557 | |||
Net Increase in Net Assets Resulting from Operations | $ | 82,632 | ||
13
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 24,075 | $ | 17,427 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (17,887 | ) | (22,497 | ) | ||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 76,444 | (48,390 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 82,632 | (53,460 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (15,580 | ) | (12,185 | ) | ||||
Class B | (1,856 | ) | (1,900 | ) | ||||
Class C | (3,270 | ) | (2,233 | ) | ||||
Class I | (207 | ) | (34 | ) | ||||
Class R3 | (6 | ) | (1 | ) | ||||
Class R4 | (1 | ) | (1 | ) | ||||
Class R5 | (1 | ) | (1 | ) | ||||
Class Y | (3,239 | ) | (770 | ) | ||||
Total distributions | (24,160 | ) | (17,125 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 48,076 | (5,268 | ) | |||||
Class B | 836 | (5,433 | ) | |||||
Class C | 21,632 | (3,638 | ) | |||||
Class I | 681 | 878 | ||||||
Class R3 | 131 | 8 | ||||||
Class R4 | 7 | 1 | ||||||
Class R5 | 1 | 1 | ||||||
Class Y | 27,761 | 11,813 | ||||||
Net increase (decrease) from capital share transactions | 99,125 | (1,638 | ) | |||||
Net Increase (Decrease) In Net Assets | 157,597 | (72,223 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 171,016 | 243,239 | ||||||
End of period | $ | 328,613 | $ | 171,016 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 428 | $ | 581 | ||||
14
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 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. 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 4:00 p.m. |
15
October 31, 2009
(000’s Omitted)
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. 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 Valuation Time. 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 are 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. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service may be 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 generally valued at amortized cost, which approximates market value. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s Valuation Time. | |||
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 and asked 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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 |
16
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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 |
17
October 31, 2009
(000’s Omitted)
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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had no outstanding forward foreign currency contracts as of October 31, 2009. | |||
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. |
18
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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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. The Fund, as shown on the Schedule of Investments, had when-issued or delayed delivery securities as of October 31, 2009. | ||
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 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 |
19
October 31, 2009
(000’s Omitted)
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) | Additional Derivative Instrument(s) Information | ||
The volume of derivative activity was minimal during the year ended October 31, 2009. | |||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | $ | — | $ | — | $ | 1,461 | $ | — | $ | — | $ | 1,461 | ||||||||||||
Foreign exchange contracts | — | — | — | (134 | ) | — | (134 | ) | ||||||||||||||||
Total | $ | — | $ | — | $ | 1,461 | $ | (134 | ) | $ | — | $ | 1,327 | |||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | — | — | (263 | ) | — | — | $ | (263 | ) | |||||||||||||||
Foreign exchange contracts | — | — | — | 18 | — | 18 | ||||||||||||||||||
Total | $ | — | $ | — | $ | (263 | ) | $ | 18 | $ | — | $ | (245 | ) | ||||||||||
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 is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset fluctuates, making the long |
20
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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. As of October 31, 2009, there were no outstanding futures contracts. | |||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. As of October 31, 2009, there were no outstanding purchased or written option contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
21
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 23,916 | $ | 17,209 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 1,018 | ||
Accumulated Capital Losses * | (97,275 | ) | ||
Unrealized Appreciation † | 23,822 | |||
Total Accumulated Deficit | $ | (72,435 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease undistributed net investment income by $68, increase accumulated net realized gain on investments by $1,712, and decrease paid-in-capital by $1,644. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2010 | $ | 25,246 | ||
2011 | 28,570 | |||
2014 | 3,595 | |||
2016 | 21,761 | |||
2017 | 18,103 | |||
Total | $ | 97,275 | ||
As a result of current or past mergers in the Fund, certain provisions in the Internal Revenue Code may limit the future utilization of capital losses. As of October 31, 2009, the Fund had $1,643 in expired capital loss carryforwards. | |||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
22
5. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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% |
Effective November 1, 2009, HIFSCO has agreed to revise the voluntary limit (which is the permanent expense limitation) on total operating expenses for the Fund, exclusive of taxes, interest, brokerage commissions, certain distribution expenses and extraordinary expenses. The new expense limitation is as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.20% | 1.95% | 1.95% | 0.95% | 1.45% | 1.15% | 0.95% | 0.95% |
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 year ended October 31, 2009, this amount is included in the Statement of Operations. |
23
October 31, 2009
(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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.15 | % | 1.15 | % | 1.15 | % | 1.20 | % | 1.33 | % | ||||||||||
Class B Shares | 1.80 | 1.87 | 1.90 | 1.94 | 2.10 | |||||||||||||||
Class C Shares | 1.90 | 1.90 | 1.83 | 1.89 | 2.00 | |||||||||||||||
Class I Shares | 0.86 | 0.82 | 0.75 | * | ||||||||||||||||
Class R3 Shares | 1.40 | 1.40 | 1.40 | † | ||||||||||||||||
Class R4 Shares | 1.10 | 1.10 | 1.10 | † | ||||||||||||||||
Class R5 Shares | 0.89 | 0.90 | 0.85 | † | ||||||||||||||||
Class Y Shares | 0.79 | 0.79 | 0.67 | 0.73 | 0.87 |
* | From May 31, 2007 (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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $714 and contingent deferred sales charges of $48 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $23. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the |
24
transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $507 for providing such services. These fees are accrued daily and paid monthly. | |||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
6. | Affiliate Holdings: | |
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R4 | 2 | |||
Class R5 | 2 |
7. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 515,851 | ||
Sales Proceeds Excluding U.S. Government Obligations | 403,290 | |||
Cost of Purchases for U.S. Government Obligations | 723 | |||
Sales Proceeds for U.S. Government Obligations | 708 |
25
October 31, 2009
(000’s Omitted)
8. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 25,318 | 2,293 | (18,806 | ) | — | 8,805 | 10,759 | 1,429 | (12,581 | ) | — | (393 | ) | |||||||||||||||||||||||||||
Amount | $ | 141,209 | $ | 13,526 | $ | (106,659 | ) | $ | — | $ | 48,076 | $ | 74,918 | $ | 10,120 | $ | (90,306 | ) | $ | — | $ | (5,268 | ) | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,352 | 251 | (1,448 | ) | — | 155 | 316 | 197 | (1,272 | ) | — | (759 | ) | |||||||||||||||||||||||||||
Amount | $ | 7,685 | $ | 1,461 | $ | (8,310 | ) | $ | — | $ | 836 | $ | 2,252 | $ | 1,397 | $ | (9,082 | ) | $ | — | $ | (5,433 | ) | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 6,444 | 402 | (3,058 | ) | — | 3,788 | 1,843 | 205 | (2,556 | ) | — | (508 | ) | |||||||||||||||||||||||||||
Amount | $ | 36,466 | $ | 2,380 | $ | (17,214 | ) | $ | — | $ | 21,632 | $ | 13,308 | $ | 1,452 | $ | (18,398 | ) | $ | — | $ | (3,638 | ) | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 716 | 27 | (577 | ) | — | 166 | 142 | 5 | (25 | ) | — | 122 | ||||||||||||||||||||||||||||
Amount | $ | 4,326 | $ | 163 | $ | (3,808 | ) | $ | — | $ | 681 | $ | 1,016 | $ | 31 | $ | (169 | ) | $ | — | $ | 878 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 25 | 1 | (4 | ) | — | 22 | 2 | — | — | — | 2 | |||||||||||||||||||||||||||||
Amount | $ | 154 | $ | 6 | $ | (29 | ) | $ | — | $ | 131 | $ | 7 | $ | 1 | $ | — | $ | — | $ | 8 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1 | 1 | — | — | 2 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 6 | $ | 1 | $ | — | $ | — | $ | 7 | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 5,701 | 527 | (1,289 | ) | — | 4,939 | 2,333 | 112 | (639 | ) | — | 1,806 | ||||||||||||||||||||||||||||
Amount | $ | 32,480 | $ | 3,106 | $ | (7,825 | ) | $ | — | $ | 27,761 | $ | 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) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 318 | $ | 1,860 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. |
26
11. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
27
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 5.52 | $ | 0.59 | $ | — | $ | 1.22 | $ | 1.81 | $ | (0.60 | ) | $ | — | $ | — | $ | (0.60 | ) | $ | 1.21 | $ | 6.73 | ||||||||||||||||||||
B | 5.51 | 0.55 | — | 1.21 | 1.76 | (0.56 | ) | — | — | (0.56 | ) | 1.20 | 6.71 | |||||||||||||||||||||||||||||||
C | 5.51 | 0.54 | — | 1.21 | 1.75 | (0.55 | ) | — | — | (0.55 | ) | 1.20 | 6.71 | |||||||||||||||||||||||||||||||
I | 5.53 | 0.61 | — | 1.21 | 1.82 | (0.61 | ) | — | — | (0.61 | ) | 1.21 | 6.74 | |||||||||||||||||||||||||||||||
R3 | 5.52 | 0.57 | — | 1.22 | 1.79 | (0.58 | ) | — | — | (0.58 | ) | 1.21 | 6.73 | |||||||||||||||||||||||||||||||
R4 | 5.53 | 0.59 | — | 1.21 | 1.80 | (0.60 | ) | — | — | (0.60 | ) | 1.20 | 6.73 | |||||||||||||||||||||||||||||||
R5 | 5.53 | 0.60 | — | 1.21 | 1.81 | (0.61 | ) | — | — | (0.61 | ) | 1.20 | 6.73 | |||||||||||||||||||||||||||||||
Y | 5.53 | 0.61 | — | 1.21 | 1.82 | (0.62 | ) | — | — | (0.62 | ) | 1.20 | 6.73 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | 7.92 | 0.58 | — | (2.40 | ) | (1.82 | ) | (0.58 | ) | — | — | (0.58 | ) | (2.40 | ) | 5.52 | ||||||||||||||||||||||||||||
B | 7.91 | 0.53 | — | (2.41 | ) | (1.88 | ) | (0.52 | ) | — | — | (0.52 | ) | (2.40 | ) | 5.51 | ||||||||||||||||||||||||||||
C | 7.91 | 0.53 | — | (2.41 | ) | (1.88 | ) | (0.52 | ) | — | — | (0.52 | ) | (2.40 | ) | 5.51 | ||||||||||||||||||||||||||||
I | 7.93 | 0.60 | — | (2.40 | ) | (1.80 | ) | (0.60 | ) | — | — | (0.60 | ) | (2.40 | ) | 5.53 | ||||||||||||||||||||||||||||
R3 | 7.93 | 0.56 | — | (2.41 | ) | (1.85 | ) | (0.56 | ) | — | — | (0.56 | ) | (2.41 | ) | 5.52 | ||||||||||||||||||||||||||||
R4 | 7.93 | 0.59 | — | (2.41 | ) | (1.82 | ) | (0.58 | ) | — | — | (0.58 | ) | (2.40 | ) | 5.53 | ||||||||||||||||||||||||||||
R5 | 7.93 | 0.60 | — | (2.40 | ) | (1.80 | ) | (0.60 | ) | — | — | (0.60 | ) | (2.40 | ) | 5.53 | ||||||||||||||||||||||||||||
Y | 7.93 | 0.60 | — | (2.40 | ) | (1.80 | ) | (0.60 | ) | — | — | (0.60 | ) | (2.40 | ) | 5.53 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 7.93 | 0.58 | — | (0.01 | ) | 0.57 | (0.58 | ) | — | — | (0.58 | ) | (0.01 | ) | 7.92 | |||||||||||||||||||||||||||||
B | 7.92 | 0.52 | — | (0.01 | ) | 0.51 | (0.52 | ) | — | — | (0.52 | ) | (0.01 | ) | 7.91 | |||||||||||||||||||||||||||||
C | 7.92 | 0.53 | — | (0.01 | ) | 0.52 | (0.53 | ) | — | — | (0.53 | ) | (0.01 | ) | 7.91 | |||||||||||||||||||||||||||||
I(f) | 8.25 | 0.26 | — | (0.33 | ) | (0.07 | ) | (0.25 | ) | — | — | (0.25 | ) | (0.32 | ) | 7.93 | ||||||||||||||||||||||||||||
R3(i) | 8.04 | 0.48 | — | (0.13 | ) | 0.35 | (0.46 | ) | — | — | (0.46 | ) | (0.11 | ) | 7.93 | |||||||||||||||||||||||||||||
R4(i) | 8.04 | 0.50 | — | (0.13 | ) | 0.37 | (0.48 | ) | — | — | (0.48 | ) | (0.11 | ) | 7.93 | |||||||||||||||||||||||||||||
R5(i) | 8.04 | 0.52 | — | (0.13 | ) | 0.39 | (0.50 | ) | — | — | (0.50 | ) | (0.11 | ) | 7.93 | |||||||||||||||||||||||||||||
Y | 7.92 | 0.71 | — | (0.09 | ) | 0.62 | (0.61 | ) | — | — | (0.61 | ) | 0.01 | 7.93 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 7.76 | 0.54 | — | 0.18 | 0.72 | (0.55 | ) | — | — | (0.55 | ) | 0.17 | 7.93 | |||||||||||||||||||||||||||||||
B | 7.74 | 0.48 | — | 0.19 | 0.67 | (0.49 | ) | — | — | (0.49 | ) | 0.18 | 7.92 | |||||||||||||||||||||||||||||||
C | 7.75 | 0.49 | — | 0.17 | 0.66 | (0.49 | ) | — | — | (0.49 | ) | 0.17 | 7.92 | |||||||||||||||||||||||||||||||
Y | 7.75 | 0.58 | — | 0.17 | 0.75 | (0.58 | ) | — | — | (0.58 | ) | 0.17 | 7.92 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 8.18 | 0.48 | — | (0.40 | ) | 0.08 | (0.50 | ) | — | — | (0.50 | ) | (0.42 | ) | 7.76 | |||||||||||||||||||||||||||||
B | 8.17 | 0.42 | — | (0.41 | ) | 0.01 | (0.44 | ) | — | — | (0.44 | ) | (0.43 | ) | 7.74 | |||||||||||||||||||||||||||||
C | 8.17 | 0.42 | — | (0.39 | ) | 0.03 | (0.45 | ) | — | — | (0.45 | ) | (0.42 | ) | 7.75 | |||||||||||||||||||||||||||||
Y | 8.17 | 0.52 | — | (0.40 | ) | 0.12 | (0.54 | ) | — | — | (0.54 | ) | (0.42 | ) | 7.75 |
(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) | Commenced operations on May 31, 2007. | |
(g) | Not annualized. | |
(h) | Annualized. | |
(i) | Commenced operations on December 22, 2006. |
28
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||
35.01 | % | $ | 202,256 | 1.30 | % | 1.15 | % | 1.15 | % | 10.16 | % | 182 | % | |||||||||||||||
34.05 | 22,749 | 2.18 | 1.80 | 1.80 | 9.54 | — | ||||||||||||||||||||||
33.90 | 51,777 | 1.96 | 1.90 | 1.90 | 9.41 | — | ||||||||||||||||||||||
35.30 | 2,068 | 0.86 | 0.86 | 0.86 | 10.36 | — | ||||||||||||||||||||||
34.68 | 166 | 1.69 | 1.40 | 1.40 | 9.89 | — | ||||||||||||||||||||||
34.83 | 18 | 1.36 | 1.10 | 1.10 | 10.21 | — | ||||||||||||||||||||||
35.11 | 11 | 0.89 | 0.89 | 0.89 | 10.46 | — | ||||||||||||||||||||||
35.21 | 49,568 | 0.79 | 0.79 | 0.79 | 10.50 | — | ||||||||||||||||||||||
(24.40 | ) | 117,343 | 1.30 | 1.15 | 1.15 | 8.07 | 111 | |||||||||||||||||||||
(25.00 | ) | 17,838 | 2.13 | 1.87 | 1.87 | 7.34 | — | |||||||||||||||||||||
(25.01 | ) | 21,634 | 1.97 | 1.90 | 1.90 | 7.30 | — | |||||||||||||||||||||
(24.11 | ) | 777 | 0.82 | 0.82 | 0.82 | 8.82 | — | |||||||||||||||||||||
(24.70 | ) | 14 | 1.63 | 1.40 | 1.40 | 7.93 | — | |||||||||||||||||||||
(24.32 | ) | 8 | 1.19 | 1.10 | 1.10 | 8.15 | — | |||||||||||||||||||||
(24.16 | ) | 8 | 0.90 | 0.90 | 0.90 | 8.35 | — | |||||||||||||||||||||
(24.09 | ) | 13,394 | 0.79 | 0.79 | 0.79 | 8.57 | — | |||||||||||||||||||||
7.36 | 171,505 | 1.36 | 1.15 | 1.15 | 7.26 | 145 | ||||||||||||||||||||||
6.56 | 31,591 | 2.17 | 1.90 | 1.90 | 6.51 | — | ||||||||||||||||||||||
6.63 | 35,066 | 2.03 | 1.83 | 1.83 | 6.58 | — | ||||||||||||||||||||||
(0.76 | ) (g) | 149 | 0.95 | (h) | 0.75 | (h) | 0.75 | (h) | 8.07 | (h) | — | |||||||||||||||||
4.49 | (g) | 10 | 1.66 | (h) | 1.40 | (h) | 1.40 | (h) | 6.99 | (h) | — | |||||||||||||||||
4.75 | (g) | 10 | 1.34 | (h) | 1.10 | (h) | 1.10 | (h) | 7.29 | (h) | — | |||||||||||||||||
4.96 | (g) | 11 | 1.06 | (h) | 0.85 | (h) | 0.85 | (h) | 7.54 | (h) | — | |||||||||||||||||
7.96 | 4,897 | 0.87 | 0.67 | 0.67 | 7.62 | — | ||||||||||||||||||||||
9.57 | 190,479 | 1.36 | 1.20 | 1.20 | 6.87 | 147 | ||||||||||||||||||||||
8.90 | 37,189 | 2.17 | 1.95 | 1.95 | 6.10 | — | ||||||||||||||||||||||
8.84 | 39,991 | �� | 2.04 | 1.89 | 1.89 | 6.15 | — | |||||||||||||||||||||
10.11 | 24,374 | 0.88 | 0.73 | 0.73 | 7.33 | — | ||||||||||||||||||||||
0.97 | 188,599 | 1.33 | 1.33 | 1.33 | 5.86 | 113 | ||||||||||||||||||||||
0.08 | 47,071 | 2.12 | 2.10 | 2.10 | 5.09 | — | ||||||||||||||||||||||
0.30 | 50,945 | 2.00 | 2.00 | 2.00 | 5.18 | — | ||||||||||||||||||||||
1.43 | 25,974 | 0.87 | 0.87 | 0.87 | 6.40 | — |
29
The Hartford Mutual Funds, Inc.
December 15, 2009
30
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
31
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 — 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009. |
32
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
33
QII* | 100.00 | % |
* | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.596 | N/A | N/A | 0.596 | ||||||||||||
Class B | 0.559 | N/A | N/A | 0.559 | ||||||||||||
Class C | 0.553 | N/A | N/A | 0.553 | ||||||||||||
Class I | 0.612 | N/A | N/A | 0.612 | ||||||||||||
Class R3 | 0.582 | N/A | N/A | 0.582 | ||||||||||||
Class R4 | 0.599 | N/A | N/A | 0.599 | ||||||||||||
Class R5 | 0.611 | N/A | N/A | 0.611 | ||||||||||||
Class Y | 0.616 | N/A | N/A | 0.616 |
34
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,239.30 | $ | 6.55 | $ | 1,000.00 | $ | 1,019.36 | $ | 5.90 | 1.16 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,234.00 | $ | 10.42 | $ | 1,000.00 | $ | 1,015.88 | $ | 9.40 | 1.85 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,233.70 | $ | 10.70 | $ | 1,000.00 | $ | 1,015.63 | $ | 9.65 | 1.90 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,240.70 | $ | 4.80 | $ | 1,000.00 | $ | 1,020.92 | $ | 4.33 | 0.85 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,237.80 | $ | 7.90 | $ | 1,000.00 | $ | 1,018.15 | $ | 7.12 | 1.40 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,239.70 | $ | 6.21 | $ | 1,000.00 | $ | 1,019.66 | $ | 5.60 | 1.10 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,241.10 | $ | 4.97 | $ | 1,000.00 | $ | 1,020.77 | $ | 4.48 | 0.88 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,241.60 | $ | 4.35 | $ | 1,000.00 | $ | 1,021.32 | $ | 3.92 | 0.77 | 184 | 365 |
35
36
37
38
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford High Yield Municipal Bond Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
11 | ||||
12 | ||||
13 | ||||
14 | ||||
15 | ||||
24 | ||||
26 | ||||
27 | ||||
29 | ||||
29 | ||||
30 | ||||
31 | ||||
32 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks to provide a high level of current income which is generally exempt from federal income taxes. Capital appreciation is a secondary objective. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
High Yield Municipal Bond A# | 16.93 | % | -3.41 | % | ||||
High Yield Municipal Bond A## | 11.67 | % | -5.23 | % | ||||
High Yield Municipal Bond B# | 16.00 | % | -4.23 | % | ||||
High Yield Municipal Bond B## | 11.00 | % | -5.29 | % | ||||
High Yield Municipal Bond C# | 16.04 | % | -4.15 | % | ||||
High Yield Municipal Bond C## | 15.04 | % | -4.15 | % | ||||
High Yield Municipal Bond I# | 17.30 | % | -3.15 | % | ||||
Barclays Capital Municipal Non-Investment | 14.52 | % | -3.46 | % | ||||
Grade Debt Index |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Christopher Bade
Vice President
2
as of October 31, 2009
Percentage of | ||||
Long-Term | ||||
Rating | Holdings | |||
AAA | 3.1 | % | ||
AA | 6.8 | |||
A | 19.7 | |||
BBB | 33.9 | |||
BB | 8.7 | |||
B | 5.3 | |||
CCC | 2.7 | |||
Not Rated | 19.8 | |||
�� | ||||
Total | 100.0 | % | ||
3
as of October 31, 2009
Percentage of | ||||
Industry | Net Assets | |||
Airport Revenues | 4.6 | % | ||
General Obligations | 10.3 | |||
Health Care/Services | 23.9 | |||
Higher Education (Univ., Dorms, etc.) | 16.4 | |||
Housing (HFA’S, etc.) | 0.6 | |||
Industrial | 8.7 | |||
Miscellaneous | 14.4 | |||
Prerefunded | 3.1 | |||
Public Facilities | 1.1 | |||
Special Tax Assessment | 3.7 | |||
Tax Allocation | 4.5 | |||
Transportation | 0.8 | |||
Utilities — Electric | 3.5 | |||
Utilities — Gas | 0.5 | |||
Utilities — Water and Sewer | 1.4 | |||
Short-Term Investments | 0.8 | |||
Other Assets and Liabilities | 1.7 | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
State | Net Assets | |||
Alaska | 0.3 | % | ||
Arizona | 2.1 | |||
California | 6.9 | |||
Colorado | 2.1 | |||
Connecticut | 0.7 | |||
Delaware | 0.3 | |||
District of Columbia | 1.6 | |||
Florida | 8.6 | |||
Georgia | 1.3 | |||
Hawaii | 0.5 | |||
Idaho | 0.6 | |||
Illinois | 4.7 | |||
Indiana | 0.3 | |||
Kansas | 0.1 | |||
Louisiana | 3.1 | |||
Maryland | 0.2 | |||
Massachusetts | 1.9 | |||
Michigan | 5.6 | |||
Minnesota | 0.4 | |||
Missouri | 1.6 | |||
Nebraska | 0.8 | |||
Nevada | 0.7 | |||
New Hampshire | 0.5 | |||
New Jersey | 4.1 | |||
New Mexico | 1.3 | |||
New York | 7.7 | |||
North Carolina | 0.3 | |||
Ohio | 4.4 | |||
Oklahoma | 0.1 | |||
Other U.S. Territories | 1.8 | |||
Pennsylvania | 3.3 | |||
Rhode Island | 2.5 | |||
South Carolina | 0.4 | |||
South Dakota | 1.9 | |||
Texas | 13.0 | |||
Utah | 1.3 | |||
Virginia | 1.9 | |||
Washington | 3.2 | |||
West Virginia | 0.7 | |||
Wisconsin | 4.7 | |||
Short-Term Investments | 0.8 | |||
Other Assets and Liabilities | 1.7 | |||
Total | 100.0 | % | ||
4
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS - 97.5% | ||||||||
Alaska - 0.3% | ||||||||
Alaska Municipal Bond Bank Auth GO | ||||||||
$ | 375 | 5.75%, 09/01/2033 | $ | 389 | ||||
Anchorage, AK, GO | ||||||||
605 | 5.25%, 08/01/2028 | 652 | ||||||
1,041 | ||||||||
Arizona - 2.1% | ||||||||
Estrella Mountain Ranch Community GO | ||||||||
265 | 6.20%, 07/15/2032 ⌂ | 244 | ||||||
Mohave County Industrial DA Correctional Fac Contract | ||||||||
3,000 | 8.00%, 05/01/2025 | 3,578 | ||||||
Pima County, AZ, Industrial Development Auth Education Rev | ||||||||
1,500 | 8.50%, 07/01/2039 | 1,552 | ||||||
Pinal County, AZ, Electric Dist #4 | ||||||||
1,150 | 6.00%, 12/01/2038 | 1,148 | ||||||
Scottsdale, AZ, IDA | ||||||||
1,000 | 5.25%, 09/01/2030 | 964 | ||||||
Show Low Bluff, AZ, Community Fac Dist Special Assessment | ||||||||
200 | 5.60%, 07/01/2031 ⌂ | 146 | ||||||
Tartesso West Community Facilities Dist GO | ||||||||
1,000 | 5.90%, 07/15/2032 ⌂ | 797 | ||||||
8,429 | ||||||||
California - 6.9% | ||||||||
California State GO | ||||||||
4,985 | 6.50%, 04/01/2033 | 5,592 | ||||||
California State Public Works Board | ||||||||
2,000 | 6.25%, 04/01/2034 | 2,051 | ||||||
California Statewide Community DA, California Baptist University | ||||||||
2,800 | 5.50%, 11/01/2038 | 2,139 | ||||||
California Statewide Community DA, Drew School | ||||||||
250 | 5.30%, 10/01/2037 | 177 | ||||||
California Statewide Community DA, Huntington Park Rev | ||||||||
200 | 5.15%, 07/01/2030 | 143 | ||||||
California Statewide Community DA, Thomas Jefferson School of Law | ||||||||
4,100 | 7.25%, 10/01/2032 | 4,159 | ||||||
Morongo Band of Mission Indians Enterprise Rev | ||||||||
1,595 | 6.50%, 03/01/2028 § | 1,356 | ||||||
MSR Energy Auth | ||||||||
2,000 | 6.50%, 11/01/2039 | 2,135 | ||||||
Rialto, CA, Redev Agency | ||||||||
2,000 | 5.88%, 09/01/2033 | 1,879 | ||||||
San Diego, CA, Redev Agency Tax Allocation | ||||||||
3,000 | 7.00%, 11/01/2039 | 3,143 | ||||||
San Francisco City & County Redev Agency | ||||||||
530 | 6.13%, 08/01/2031 | 468 | ||||||
590 | 6.25%, 08/01/2033 | 558 | ||||||
San Jose, CA, Redev Agency | ||||||||
500 | 6.50%, 08/01/2023 | 553 | ||||||
Santa Cruz County, CA, Redev Agency | ||||||||
1,335 | 6.63%, 09/01/2029 | 1,441 | ||||||
Turlock, CA, Health Facilities Rev | ||||||||
2,675 | 5.38%, 10/15/2034 | 2,294 | ||||||
28,088 | ||||||||
Colorado - 2.1% | ||||||||
Baptist Road Rural Transportation Auth, Sales & Use Tax Rev | ||||||||
800 | 5.00%, 12/01/2026 | 534 | ||||||
Colorado E-470 Public Highway Auth Rev | ||||||||
1,875 | 5.50%, 09/01/2024 | 1,791 | ||||||
Colorado Educational & Cultural FA Rev, Charter School-Windsor Academy Proj | ||||||||
500 | 5.70%, 05/01/2037 ⌂ | 378 | ||||||
Colorado Health FA Rev | ||||||||
2,500 | 5.50%, 05/15/2028 | 2,466 | ||||||
Denver, CO, City & County Special Fac Airport AMT | ||||||||
4,000 | 5.25%, 10/01/2032 | 2,827 | ||||||
North Range, CO, Metropolitan Dist #2 | ||||||||
500 | 5.50%, 12/15/2027 | 370 | ||||||
Park Meadows, CO, Business Improvement Dist Shared Sales Tax Rev | ||||||||
360 | 5.35%, 12/01/2031 | 292 | ||||||
8,658 | ||||||||
Connecticut - 0.7% | ||||||||
Connecticut State Health & Educational Facilities | ||||||||
3,000 | 5.50%, 07/01/2022 | 3,012 | ||||||
Delaware - 0.3% | ||||||||
Millsboro, DE, Special Obligation Plantation Lakes Special Development | ||||||||
500 | 5.45%, 07/01/2036 ⌂ | 334 | ||||||
Sussex County, DE, Del Rev | ||||||||
1,235 | 5.90%, 01/01/2026 | 1,014 | ||||||
1,348 | ||||||||
District of Columbia - 1.6% | ||||||||
District of Columbia Tobacco Settlement Financing Corp | ||||||||
6,675 | 6.50%, 05/15/2033 | 6,433 | ||||||
Florida - 8.6% | ||||||||
Beeline Community Development Dist | ||||||||
1,205 | 7.00%, 05/01/2037 | 1,141 | ||||||
Colonial Country Club Community Development Dist, Capital Improvement Rev | ||||||||
2,080 | 6.40%, 05/01/2033 | 2,148 | ||||||
Florida Village Community Development | ||||||||
980 | 6.50%, 05/01/2033 | 996 | ||||||
Florida Village Community Development Dist No 8 | ||||||||
2,840 | 6.38%, 05/01/2038 | 2,463 | ||||||
Highlands County, FL, Adventist Health (Prerefunded with US Gov’t Securities) | ||||||||
125 | 5.25%, 11/15/2036 | 145 | ||||||
Hillsborough County, FL, IDA | ||||||||
1,150 | 8.00%, 08/15/2032 | 1,266 | ||||||
Jacksonville, FL, Econ Development Community Health Care Facilities | ||||||||
2,000 | 6.25%, 09/01/2027 | 1,852 | ||||||
Lakeland Florida Retirement Community Rev | �� | |||||||
1,750 | 6.38%, 01/01/2043 | 1,550 | ||||||
Lee County, FL, Industrial Development Auth | ||||||||
1,000 | 5.25%, 06/15/2027 | 776 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS - 97.5% - (continued) | ||||||||
Florida - 8.6% - (continued) | ||||||||
Magnolia Creek, FL, Community Development Dist Capital Improvement | ||||||||
$ | 500 | 5.90%, 05/01/2039 ⌂ | $ | 296 | ||||
Miami-Dade County, FL, Aviation Rev | ||||||||
4,220 | 5.50%, 10/01/2036 | 4,265 | ||||||
Miami-Dade County, FL, Educational Facilities Auth | ||||||||
3,000 | 5.75%, 04/01/2028 | 3,119 | ||||||
Palm Beach County, FL, Health FA Rev Waterford Proj | ||||||||
2,400 | 5.88%, 11/15/2037 | 2,110 | ||||||
Parker Road, FL, Community Development Dist Cap Improvement Ser A | ||||||||
195 | 5.60%, 05/01/2038 ⌂ | 111 | ||||||
Putnam County, FL, DA | ||||||||
3,125 | 5.35%, 03/15/2042 | 3,219 | ||||||
River Bend Community Development Dist, Capital Improvement Rev | ||||||||
1,945 | 0.00%, 11/01/2015 • | 1,205 | ||||||
Seminole Tribe of Florida | ||||||||
4,500 | 5.25%, 10/01/2027 § | 4,028 | ||||||
1,000 | 5.50%, 10/01/2024 § | 939 | ||||||
Six Mile Creek, FL, Community Development Dist | ||||||||
1,525 | 5.88%, 05/01/2038 | 654 | ||||||
St. Johns County, FL, IDA | ||||||||
1,765 | 5.00%, 02/15/2027 | 1,571 | ||||||
Tolomato, FL, Community Development Dist | ||||||||
800 | 6.65%, 05/01/2040 | 583 | ||||||
University Square Community Development | ||||||||
495 | 5.88%, 05/01/2038 | 360 | ||||||
34,797 | ||||||||
Georgia - 1.3% | ||||||||
Atlanta Water & Wastewater Rev | ||||||||
2,000 | 6.00%, 11/01/2022 | 2,157 | ||||||
Augusta, GA, Airport Rev AMT | ||||||||
165 | 5.35%, 01/01/2028 | 137 | ||||||
230 | 5.45%, 01/01/2031 | 188 | ||||||
Dekalb County, GA, DA | ||||||||
1,500 | 6.00%, 07/01/2034 | 1,635 | ||||||
Marietta, GA, DA | ||||||||
1,500 | 7.00%, 06/15/2030 | 1,398 | ||||||
5,515 | ||||||||
Hawaii - 0.5% | ||||||||
Hawaii State Dept of Budget & Fin | ||||||||
1,750 | 9.00%, 11/15/2044 | 1,860 | ||||||
Idaho - 0.6% | ||||||||
Idaho Arts Charter School | ||||||||
1,000 | 6.25%, 12/01/2028 | 857 | ||||||
Idaho Board Bank Auth | ||||||||
1,465 | 5.63%, 09/15/2026 | 1,679 | ||||||
2,536 | ||||||||
Illinois - 4.7% | ||||||||
Aurora, IL, Tax Increment Rev | ||||||||
1,000 | 6.75%, 12/30/2027 | 966 | ||||||
Belleville, IL, Tax Increment | ||||||||
1,000 | 5.70%, 05/01/2036 ⌂ | 826 | ||||||
Chicago, IL, O’Hare Int’l Airport Rev | ||||||||
2,210 | 6.00%, 01/01/2017 | 2,288 | ||||||
Hampshire, IL, Special Service Area #13, Tuscany Woods Proj | ||||||||
200 | 5.75%, 03/01/2037 ⌂ | 104 | ||||||
Hampshire, IL, Special Service Area #16, Prairie Ridge Proj | ||||||||
200 | 6.00%, 03/01/2046 | 143 | ||||||
Illinois FA Rev | ||||||||
1,200 | 5.25%, 11/01/2039 | 1,221 | ||||||
2,870 | 5.38%, 07/01/2033 - 11/15/2039 | 2,762 | ||||||
6,000 | 5.50%, 08/15/2030 | 5,742 | ||||||
1,400 | 6.00%, 03/01/2038 | 1,516 | ||||||
190 | 6.25%, 02/01/2033 | 197 | ||||||
Illinois FA, Children’s Memorial Hospital Ser B | ||||||||
1,500 | 5.50%, 08/15/2028 | 1,508 | ||||||
Springfield, IL, Water Rev | ||||||||
500 | 5.25%, 03/01/2026 | 536 | ||||||
University of Illinois Rev | ||||||||
1,205 | 5.75%, 04/01/2038 | 1,307 | ||||||
19,116 | ||||||||
Indiana - 0.3% | ||||||||
Indiana Municipal Power Agency | ||||||||
1,000 | 5.75%, 01/01/2034 | 1,039 | ||||||
Vigo County, IN, Union Hospital | ||||||||
500 | 5.70%, 09/01/2037 § | 419 | ||||||
1,458 | ||||||||
Kansas - 0.1% | ||||||||
Olathe, KS, Tax Increment Rev, West Village Center | ||||||||
500 | 5.50%, 09/01/2026 ⌂ | 392 | ||||||
Louisiana - 3.1% | ||||||||
Louisiana Local Government Environmental Facilities & Community Development | ||||||||
6,000 | 6.75%, 11/01/2032 | 5,904 | ||||||
Louisiana Public Fac Auth | ||||||||
3,500 | 6.75%, 07/01/2039 | 3,802 | ||||||
Louisiana Public Fac Auth, Susla Fac, Inc. | ||||||||
500 | 5.75%, 07/01/2039 ⌂ | 357 | ||||||
New Orleans Aviation Board Revenues | ||||||||
2,500 | 6.00%, 01/01/2023 | 2,722 | ||||||
12,785 | ||||||||
Maryland - 0.2% | ||||||||
Maryland State Health & Higher Education FA Rev | ||||||||
770 | 6.00%, 01/01/2028 | 801 | ||||||
Massachusetts - 1.9% | ||||||||
Massachusetts Development Fin Agency Rev | ||||||||
1,200 | 8.00%, 04/15/2031 | 1,286 | ||||||
Massachusetts State Health & Education Facilities | ||||||||
1,000 | 5.13%, 07/01/2033 | 949 | ||||||
3,000 | 5.50%, 10/01/2024 | 3,134 | ||||||
2,355 | 8.00%, 10/01/2039 | 2,616 | ||||||
7,985 | ||||||||
6
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS - 97.5% - (continued) | ||||||||
Michigan - 5.6% | ||||||||
Detroit, MI, GO | ||||||||
$ | 4,500 | 5.00%, 04/01/2016 | $ | 4,080 | ||||
Flint, MI, International Academy | ||||||||
3,985 | 5.75%, 10/01/2037 | 3,178 | ||||||
Kent Hospital FA | ||||||||
3,000 | 6.00%, 07/01/2035 | 2,430 | ||||||
Michigan Public Educational Facilities | ||||||||
2,025 | 6.35%, 11/01/2028 | 2,007 | ||||||
5,000 | 6.50%, 09/01/2037 § | 4,158 | ||||||
Michigan State Hospital FA, McLaren Health Care | ||||||||
3,000 | 5.63%, 05/15/2028 | 3,017 | ||||||
Michigan Tobacco Settlement FA Ser A | ||||||||
2,000 | 6.00%, 06/01/2048 | 1,531 | ||||||
Royal Oak Hospital Financial Auth | ||||||||
2,000 | 8.25%, 09/01/2039 | 2,351 | ||||||
22,752 | ||||||||
Minnesota - 0.4% | ||||||||
Baytown Township, MN | ||||||||
750 | 7.00%, 08/01/2038 | 659 | ||||||
Falcon Heights, MN, Lease Rev | ||||||||
525 | 6.00%, 11/01/2037 | 413 | ||||||
Minneapolis, MN, Multifamily Housing Rev AMT | ||||||||
200 | 5.40%, 04/01/2028 | 159 | ||||||
1,231 | ||||||||
Missouri - 1.6% | ||||||||
Branson Hills, MO, Infrastructure Fac | ||||||||
100 | 5.50%, 04/01/2027 | 81 | ||||||
Branson, MO, Regional Airport Transportation Development AMT | ||||||||
1,300 | 6.00%, 07/01/2025 | 954 | ||||||
Kansas City, MO, Tax Increment Rev Maincor Proj Ser A | ||||||||
500 | 5.25%, 03/01/2018 | 466 | ||||||
St Louis, MO, Airport Rev | ||||||||
5,000 | 6.63%, 07/01/2034 | 5,248 | ||||||
6,749 | ||||||||
Nebraska - 0.8% | ||||||||
Madison County Hospital Auth | ||||||||
2,000 | 6.00%, 07/01/2033 | 2,092 | ||||||
Omaha Public Power Dist | ||||||||
1,000 | 5.50%, 02/01/2033 | 1,082 | ||||||
3,174 | ||||||||
Nevada - 0.7% | ||||||||
Las Vegas, NV, Special Improvement Dist #808 & 810, Summerlin Village | ||||||||
500 | 6.13%, 06/01/2031 ⌂ | 355 | ||||||
Mesquite Special Improvement Dist #07-01 | ||||||||
500 | 6.00%, 08/01/2027 | 388 | ||||||
Sparks Tourism Improvement | ||||||||
2,240 | 6.75%, 06/15/2028 § | 2,116 | ||||||
2,859 | ||||||||
New Hampshire - 0.5% | ||||||||
New Hampshire Business Financing Auth Rev | ||||||||
2,000 | 6.88%, 10/01/2039 | 1,974 | ||||||
New Hampshire State Business Fin Rev AMT | ||||||||
200 | 5.20%, 05/01/2027 | 190 | ||||||
2,164 | ||||||||
New Jersey - 4.1% | ||||||||
Burlington County, NJ, Bridge Commission Econ Development Rev, The Evergreen Proj | ||||||||
1,500 | 5.63%, 01/01/2038 | 1,328 | ||||||
New Jersey Econ DA | ||||||||
4,800 | 6.25%, 09/15/2019 | 4,362 | ||||||
New Jersey Health Care Facilities FA | ||||||||
4,000 | 6.63%, 07/01/2038 | 4,072 | ||||||
New Jersey Health Care Facilities FA Rev | ||||||||
2,855 | 5.75%, 10/01/2031 | 3,002 | ||||||
New Jersey Health Care Services FA | ||||||||
800 | 5.50%, 07/01/2030 | 746 | ||||||
New Jersey State Educational FA Rev | ||||||||
2,000 | 7.50%, 12/01/2032 | 2,260 | ||||||
Tobacco Settlement Financing Corp, NJ | ||||||||
2,000 | 5.00%, 06/01/2041 | 1,344 | ||||||
17,114 | ||||||||
New Mexico - 1.3% | ||||||||
Los Alamos County, NM | ||||||||
3,000 | 5.88%, 06/01/2027 | 3,282 | ||||||
Montecito Estates Public Improvement Rev | ||||||||
1,000 | 7.00%, 10/01/2037 ⌂ | 809 | ||||||
Otero County, NM, Jail Proj Rev | ||||||||
1,370 | 6.00%, 04/01/2028 | 1,118 | ||||||
5,209 | ||||||||
New York - 7.7% | ||||||||
Erie County, NY, IDA Global Concepts Charter School Proj | ||||||||
2,070 | 6.25%, 10/01/2037 | 1,689 | ||||||
Genesee County, NY, IDA Civic Fac Rev, United Memorial Medical Center | ||||||||
500 | 5.00%, 12/01/2027 | 378 | ||||||
Long Island Power Auth | ||||||||
3,000 | 6.25%, 04/01/2033 | 3,394 | ||||||
Nassau County, NY, IDA Continuing Care Retirement | ||||||||
2,500 | 6.70%, 01/01/2043 | 2,129 | ||||||
Nassau County, NY, IDA Continuing Care Retirement, Amsterdam at Harborside, Ser A | ||||||||
1,000 | 6.50%, 01/01/2027 | 892 | ||||||
New York State Dormitory Auth Non State Supported Debt, Orange Regional Med Center | ||||||||
3,125 | 6.13%, 12/01/2029 | 2,842 | ||||||
New York State Dormitory Auth Rev Non St Supported Debt | ||||||||
2,000 | 6.00%, 07/01/2033 | 2,143 | ||||||
New York, NY, GO | ||||||||
4,000 | 6.25%, 10/15/2028 | 4,642 | ||||||
New York, NY, IDA American Airlines JFK International Airport AMT | ||||||||
6,860 | 7.63%, 08/01/2025 | 6,583 | ||||||
4,865 | 8.00%, 08/01/2012 | 4,857 | ||||||
Ulster County, NY, IDA | ||||||||
3,250 | 6.00%, 09/15/2037 - 09/15/2042 | 2,478 | ||||||
32,027 | ||||||||
7
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS - 97.5% - (continued) | ||||||||
North Carolina - 0.3% | ||||||||
North Carolina Eastern Municipal Power Agency | ||||||||
$ | 1,000 | 5.50%, 01/01/2026 | $ | 1,052 | ||||
Ohio - 4.4% | ||||||||
Buckeye Tobacco Settlement FA | ||||||||
7,000 | 5.88%, 06/01/2047 | 5,165 | ||||||
12,500 | 6.50%, 06/01/2047 | 10,078 | ||||||
Ohio State Higher Educational Facilities Rev | ||||||||
3,000 | 5.50%, 12/01/2036 | 3,097 | ||||||
18,340 | ||||||||
Oklahoma - 0.1% | ||||||||
Oklahoma Development FA, Hospital Rev Great Plains Regional Medical Center | ||||||||
500 | 5.13%, 12/01/2036 | 436 | ||||||
Other U.S. Territories - 1.8% | ||||||||
Guam Government | ||||||||
935 | 5.75%, 12/01/2034 | 950 | ||||||
3,000 | 6.75%, 11/15/2029 | 3,217 | ||||||
Puerto Rico Commonwealth | ||||||||
3,570 | 5.50%, 07/01/2032 | 3,471 | ||||||
7,638 | ||||||||
Pennsylvania - 3.3% | ||||||||
Erie Higher Educational Building Auth | ||||||||
1,000 | 5.50%, 03/15/2038 | 973 | ||||||
Northampton County, PA | ||||||||
2,000 | 5.50%, 08/15/2035 | 1,954 | ||||||
Pennsylvania Econ Development FA | ||||||||
3,000 | 7.00%, 07/15/2039 | 3,168 | ||||||
Pennsylvania State Higher Educational FA Rev | ||||||||
855 | 5.75%, 07/01/2028 | 817 | ||||||
Pennsylvania Turnpike Commission | ||||||||
1,335 | 6.00%, 06/01/2028 | 1,511 | ||||||
Philadelphia GO | ||||||||
1,000 | 7.00%, 07/15/2028 | 1,180 | ||||||
Philadelphia, PA, IDA | ||||||||
500 | 5.25%, 05/01/2037 | 362 | ||||||
Philadelphia, PA, Municipal Auth | ||||||||
750 | 6.38%, 04/01/2029 | 789 | ||||||
1,000 | 6.50%, 04/01/2034 | 1,053 | ||||||
Philadelphia, PA, Water & Wastewater Rev | ||||||||
1,000 | 5.25%, 01/01/2036 | 1,015 | ||||||
12,822 | ||||||||
Rhode Island - 2.5% | ||||||||
Rhode Island Health & Educational Building Corp | ||||||||
2,000 | 7.00%, 05/15/2039 | 2,192 | ||||||
Rhode Island Tobacco Settlement Funding Corp | ||||||||
750 | 6.00%, 06/01/2023 | 761 | ||||||
Tobacco Settlement Financing Corp | ||||||||
8,000 | 6.25%, 06/01/2042 | 7,271 | ||||||
10,224 | ||||||||
South Carolina - 0.4% | ||||||||
Lancaster County, SC, Sun City Assessment | ||||||||
1,987 | 7.70%, 11/01/2017 | 1,805 | ||||||
South Dakota - 1.9% | ||||||||
South Dakota Educational Enhancement Funding Corp | ||||||||
6,030 | 6.50%, 06/01/2032 | 5,695 | ||||||
South Dakota Housing DA | ||||||||
1,985 | 6.13%, 05/01/2033 | 2,128 | ||||||
7,823 | ||||||||
Texas - 13.0% | ||||||||
Brazos County Health Facilities Development Corp | ||||||||
3,260 | 5.50%, 01/01/2038 | 2,980 | ||||||
Brazos County, TX, Health Facilities Development Corp | ||||||||
3,310 | 5.50%, 01/01/2033 | 3,072 | ||||||
Burnet County, TX, Public Fac Proj Rev | ||||||||
4,000 | 7.75%, 08/01/2029 | 4,046 | ||||||
Clifton Higher Education Fin Corp | ||||||||
2,000 | 8.75%, 02/15/2028 | 2,343 | ||||||
Dallas County Utility & Reclamation Dist | ||||||||
5,000 | 5.38%, 02/15/2029 | 4,739 | ||||||
Dallas Fort Worth, TX, International Airport | ||||||||
3,000 | 6.00%, 11/01/2032 | 3,001 | ||||||
Dallas-Fort Worth, TX, International Airport AMT | ||||||||
2,000 | 6.15%, 01/01/2016 | 1,961 | ||||||
Garza County, TX, Public Fac Corp Rev | ||||||||
350 | 5.75%, 10/01/2025 | 358 | ||||||
Harris County, TX, Cultural Education Fac Baylor CLG Medicine | ||||||||
2,855 | 5.63%, 11/15/2032 | 2,588 | ||||||
Houston, TX, Airport System Rev | ||||||||
6,500 | 6.75%, 07/01/2021 | 6,110 | ||||||
Kimble County Texas Hospital Dist | ||||||||
2,500 | 6.25%, 08/15/2033 | 2,431 | ||||||
La Vernia Texas Higher Education | ||||||||
2,105 | 9.00%, 08/15/2038 | 2,499 | ||||||
Lewisville, TX, Combination Contract Rev | ||||||||
4,000 | 6.13%, 09/01/2029 | 4,118 | ||||||
Lower Colorado River Auth Rev | ||||||||
3,000 | 7.25%, 05/15/2037 | 3,306 | ||||||
Maverick County, TX, Public Fac Corp Proj Rev | ||||||||
1,495 | 6.25%, 02/01/2024 | 1,315 | ||||||
Mc Lennan County, TX, Public Fac | ||||||||
3,000 | 6.63%, 06/01/2035 | 3,275 | ||||||
Texas Midwest Public Facilities Corp Rev | ||||||||
3,000 | 9.00%, 10/01/2030 | 3,118 | ||||||
Travis County, TX, Health Fac, Querencia Barton Creek Project | ||||||||
600 | 5.65%, 11/15/2035 | 474 | ||||||
Willacy County, TX, GO | ||||||||
2,445 | 6.88%, 09/01/2028 | 2,036 | ||||||
53,770 | ||||||||
Utah - 1.3% | ||||||||
Provo, UT, Lakeview Charter School | ||||||||
1,300 | 5.63%, 07/15/2037 | 994 | ||||||
Provo, UT, Renaissance Charter School | ||||||||
200 | 5.63%, 07/15/2037 | 158 | ||||||
Utah County, UT, Charter School Rev | ||||||||
1,000 | 6.00%, 02/15/2038 | 797 |
8
Shares or Principal Amount | Market Value ╪ | |||||||||||
MUNICIPAL BONDS - 97.5% - (continued) | ||||||||||||
Utah - 1.3% - (continued) | ||||||||||||
Utah State Charter School FA, Channing Hall Ser A | ||||||||||||
$ | 750 | 5.88%, 07/15/2027 § | $ | 580 | ||||||||
700 | 6.00%, 07/15/2037 § | 522 | ||||||||||
Utah State Charter School FA, Charter School Rev | ||||||||||||
2,000 | 6.75%, 08/15/2028 | 1,791 | ||||||||||
Utah State Charter School FA, Summit Academy Ser A | ||||||||||||
1,500 | 5.80%, 06/15/2038 | 1,151 | ||||||||||
5,993 | ||||||||||||
Virginia - 1.9% | ||||||||||||
Lexington, VA, IDA Residential Care Fac Rev | ||||||||||||
1,050 | 5.50%, 01/01/2037 | 813 | ||||||||||
Norfolk, VA, Redev & Housing Auth Rev | ||||||||||||
2,005 | 6.13%, 01/01/2035 | 1,705 | ||||||||||
Peninsula, VA, Turn Center Community Dev DA | ||||||||||||
300 | 6.45%, 09/01/2037 | 259 | ||||||||||
Virginia Small Business Financing Auth Rev | ||||||||||||
3,000 | 9.00%, 07/01/2039 | 3,046 | ||||||||||
Washington County Hospital Fac Rev | ||||||||||||
1,750 | 7.75%, 07/01/2038 | 2,000 | ||||||||||
7,823 | ||||||||||||
Washington - 3.2% | ||||||||||||
King County, WA, Public Hospital | ||||||||||||
3,000 | 7.25%, 12/01/2038 | 3,093 | ||||||||||
Skagit County, WA, Public Hospital Rev | ||||||||||||
2,000 | 5.75%, 12/01/2032 | 1,982 | ||||||||||
Washington Health Care Facilities Auth | ||||||||||||
4,000 | 6.25%, 10/01/2028 | 4,350 | ||||||||||
Washington State Health Care FA Rev | ||||||||||||
3,600 | 6.13%, 08/15/2037 | 3,670 | ||||||||||
13,095 | ||||||||||||
West Virginia - 0.7% | ||||||||||||
West Virginia State Hospital FA Rev, Thomas Health Systems | ||||||||||||
3,500 | 6.50%, 10/01/2028 - 10/01/2038 | 3,237 | ||||||||||
Wisconsin - 4.7% | ||||||||||||
Badger Tobacco Asset Securitization Corp of WI (Prerefunded with US Gov’t Securities) | ||||||||||||
10,575 | 6.13%, 06/01/2027 | 11,457 | ||||||||||
1,000 | 6.38%, 06/01/2032 | 1,120 | ||||||||||
Wisconsin State General Fund | ||||||||||||
185 | 5.75%, 05/01/2033 | 203 | ||||||||||
1,295 | 6.00%, 05/01/2036 | 1,433 | ||||||||||
Wisconsin State Health & Educational FA Rev | ||||||||||||
2,500 | 5.50%, 08/15/2023 | 2,503 | ||||||||||
1,000 | 7.25%, 09/15/2029 | 1,027 | ||||||||||
1,000 | 7.63%, 09/15/2039 | 1,040 | ||||||||||
Wisconsin State Health & Educational FA, Wellington Homes Wis LLC | ||||||||||||
600 | 6.75%, 09/01/2037 | 477 | ||||||||||
19,260 | ||||||||||||
Total municipal bonds (cost $404,199) | $ | 400,851 | ||||||||||
Total long-term investments (cost $404,199) | $ | 400,851 | ||||||||||
SHORT-TERM INVESTMENTS - 0.8% | ||||||||||||
Investment Pools and Funds - 0.8% | ||||||||||||
3,281 | State Street Bank Tax Free Money Market Fund | $ | 3,281 | |||||||||
Total short-term investments (cost $3,281) | $ | 3,281 | ||||||||||
Total investments (cost $407,480) ▲ | 98.3 | % | $ | 404,132 | ||||||||
Other assets and liabilities | 1.7 | % | 6,978 | |||||||||
Total net assets | 100.0 | % | $ | 411,110 | ||||||||
Note: Percentage of investments as shown is the ratio of the total market value to total net assets. | ||
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $407,480 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 16,813 | ||
Unrealized Depreciation | (20,161 | ) | ||
Net Unrealized Depreciation | $ | (3,348 | ) | |
• | Currently non-income producing. For long-term debt securities, items identified are in default as to payment of interest and/or principal. | |
§ | 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 October 31, 2009, was $14,118, which represents 3.43% 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 | |||||||||
09/2007 | $ | 1,000 | Belleville, IL, Tax Increment, 5.70%, 05/01/2036 | $ | 994 | |||||||
06/2007 | $ | 500 | Colorado Educational & Cultural FA Rev, Charter School-Windsor Academy Proj, 5.70%, 05/01/2037 | 500 | ||||||||
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 | ||||||||
08/2007 | $ | 500 | Las Vegas, NV, Special Improvement Dist #808 & 810, Summerlin Village, 6.13%, 06/01/2031 | 499 | ||||||||
07/2007 | $ | 500 | Louisiana Public Fac Auth, Susla Fac, Inc., 5.75%, 07/01/2039 - 144A | 503 |
9
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
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 | Olathe, KS, Tax Increment Rev, West Village Center, 5.50%, 09/01/2026 | 498 | ||||||||
05/2007 | $ | 195 | Parker Road, FL, Community Development Dist Cap Improvement | |||||||||
Ser A, 5.60%, 05/01/2038 | 194 | |||||||||||
05/2007 | $ | 200 | Show Low Bluff, AZ, Community Fac Dist Special Assessment, 5.60%, 07/01/2031 - 144A | 200 | ||||||||
09/2007 | $ | 1,000 | Tartesso West Community Facilities Dist GO, 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 | |
PA | — Port Authority | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
10
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Municipal Bonds | $ | 400,851 | $ | — | $ | 400,851 | $ | — | ||||||||
Short-Term Investments | 3,281 | 3,281 | — | — | ||||||||||||
Total | $ | 404,132 | $ | 3,281 | $ | 400,851 | $ | — | ||||||||
11
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $407,480) | $ | 404,132 | ||
Receivables: | ||||
Fund shares sold | 968 | |||
Dividends and interest | 7,611 | |||
Other assets | 100 | |||
Total assets | 412,811 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 951 | |||
Investment management fees | 37 | |||
Dividends | 641 | |||
Distribution fees | 29 | |||
Accrued expenses | 43 | |||
Total liabilities | 1,701 | |||
Net assets | $ | 411,110 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 443,066 | |||
Accumulated undistributed net investment income | 242 | |||
Accumulated net realized loss on investments | (28,850 | ) | ||
Unrealized depreciation of investments | (3,348 | ) | ||
Net assets | $ | 411,110 | ||
Shares authorized | 650,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.02/$8.40 | ||
Shares outstanding | 27,737 | |||
Net assets | $ | 222,328 | ||
Class B: Net asset value per share | $ | 8.01 | ||
Shares outstanding | 939 | |||
Net assets | $ | 7,523 | ||
Class C: Net asset value per share | $ | 8.02 | ||
Shares outstanding | 13,852 | |||
Net assets | $ | 111,097 | ||
Class I: Net asset value per share | $ | 8.03 | ||
Shares outstanding | 8,740 | |||
Net assets | $ | 70,162 | ||
12
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Interest | $ | 22,847 | ||
Total investment income | 22,847 | |||
Expenses: | ||||
Investment management fees | 1,887 | |||
Transfer agent fees | 177 | |||
Distribution fees | ||||
Class A | 482 | |||
Class B | 60 | |||
Class C | 899 | |||
Custodian fees | 4 | |||
Accounting services fees | 62 | |||
Registration and filing fees | 87 | |||
Board of Directors’ fees | 11 | |||
Audit fees | 22 | |||
Other expenses | 94 | |||
Total expenses (before waivers and fees paid indirectly) | 3,785 | |||
Expense waivers | (245 | ) | ||
Custodian fee offset | (1 | ) | ||
Total waivers and fees paid indirectly | (246 | ) | ||
Total expenses, net | 3,539 | |||
Net Investment Income | 19,308 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (15,644 | ) | ||
Net Realized Loss on Investments | (15,644 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 53,982 | |||
Net Changes in Unrealized Appreciation of Investments | 53,982 | |||
Net Gain on Investments | 38,338 | |||
Net Increase in Net Assets Resulting from Operations | $ | 57,646 | ||
13
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 19,308 | $ | 11,520 | ||||
Net realized loss on investments | (15,644 | ) | (12,685 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 53,982 | (56,281 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 57,646 | (57,446 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (11,198 | ) | (6,892 | ) | ||||
Class B | (299 | ) | (156 | ) | ||||
Class C | (4,527 | ) | (2,367 | ) | ||||
Class I | (3,265 | ) | (2,152 | ) | ||||
Total distributions | (19,289 | ) | (11,567 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 29,534 | 164,319 | ||||||
Class B | 2,097 | 4,369 | ||||||
Class C | 24,151 | 81,960 | ||||||
Class I | 10,347 | 59,280 | ||||||
Net increase from capital share transactions | 66,129 | 309,928 | ||||||
Net Increase In Net Assets | 104,486 | 240,915 | ||||||
Net Assets: | ||||||||
Beginning of period | 306,624 | 65,709 | ||||||
End of period | $ | 411,110 | $ | 306,624 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 242 | $ | 223 | ||||
14
Notes to Financial Statements
October 31, 2009
(000’s Omitted)
1. | Organization: |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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. 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 |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 Valuation Time. 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 using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Securities for which prices are not available from an independent pricing service may be 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 generally 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. |
16
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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 October 31, 2009, the Fund had no outstanding when-issued or delayed delivery securities. | ||
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. |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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) | 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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Tax Exempt Income † | $ | 19,343 | $ | 10,972 |
† | The Fund designates these distributions as exempt interest pursuant to IRC Sec. 852(b)(5). |
18
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 883 | ||
Accumulated Capital Losses * | (28,850 | ) | ||
Unrealized Depreciation † | (3,348 | ) | ||
Total Accumulated Deficit | $ | (31,315 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2015 | $ | 284 | ||
2016 | 12,922 | |||
2017 | 15,644 | |||
Total | $ | 28,850 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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 year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | ||||||||||
October 31, | October 31, | October 31, | ||||||||||
2009 | 2008 | 2007 | ||||||||||
Class A Shares | 0.85 | % | 0.40 | % | 0.25 | %* | ||||||
Class B Shares | 1.68 | 1.19 | 1.00 | * | ||||||||
Class C Shares | 1.62 | 1.17 | 1.01 | * | ||||||||
Class I Shares | 0.62 | 0.17 | 0.00 | * |
* | From May 31, 2007 (date shares became available to the public), 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- |
20
dealers, financing distribution costs and maintaining financial books and records. For the year ended October 31, 2009, HIFSCO received front-end load sales charges of $1,461 and contingent deferred sales charges of $152 from the Fund. | |||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $31. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $173 for providing such services. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: |
For the year ended October 31, 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 | $ | 175,555 | ||
Sales Proceeds Excluding U.S. Government Obligations | 83,656 |
21
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
6. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 15,946 | 922 | (12,703 | ) | — | 4,165 | 25,895 | 436 | (7,649 | ) | — | 18,682 | ||||||||||||||||||||||||||||
Amount | $ | 115,075 | $ | 6,760 | $ | (92,301 | ) | $ | — | $ | 29,534 | $ | 225,224 | $ | 3,641 | $ | (64,546 | ) | $ | — | $ | 164,319 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 433 | 24 | (160 | ) | — | 297 | 575 | 10 | (84 | ) | — | 501 | ||||||||||||||||||||||||||||
Amount | $ | 3,086 | $ | 171 | $ | (1,160 | ) | $ | — | $ | 2,097 | $ | 5,013 | $ | 83 | $ | (727 | ) | $ | — | $ | 4,369 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 5,702 | 325 | (2,718 | ) | — | 3,309 | 10,561 | 131 | (1,336 | ) | — | 9,356 | ||||||||||||||||||||||||||||
Amount | $ | 41,448 | $ | 2,391 | $ | (19,688 | ) | $ | — | $ | 24,151 | $ | 91,857 | $ | 1,083 | $ | (10,980 | ) | $ | — | $ | 81,960 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 5,463 | 334 | (4,485 | ) | — | 1,312 | 8,828 | 182 | (2,309 | ) | — | 6,701 | ||||||||||||||||||||||||||||
Amount | $ | 40,444 | $ | 2,451 | $ | (32,548 | ) | $ | — | $ | 10,347 | $ | 76,859 | $ | 1,510 | $ | (19,089 | ) | $ | — | $ | 59,280 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 5 | $ | 34 | |||||
For the Year Ended October 31, 2008 | — | $ | — |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. |
8. | Subsequent Events: |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
22
23
- Selected Per-Share Data (a) - | ||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class(a) | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.27 | $ | 0.42 | $ | — | $ | 0.76 | $ | 1.18 | $ | (0.43 | ) | $ | — | $ | — | $ | (0.43 | ) | $ | 0.75 | $ | 8.02 | ||||||||||||||||||||
B | 7.26 | 0.36 | — | 0.76 | 1.12 | (0.37 | ) | — | — | (0.37 | ) | 0.75 | 8.01 | |||||||||||||||||||||||||||||||
C | 7.27 | 0.37 | — | 0.75 | 1.12 | (0.37 | ) | — | — | (0.37 | ) | 0.75 | 8.02 | |||||||||||||||||||||||||||||||
I | 7.27 | 0.44 | — | 0.76 | 1.20 | (0.44 | ) | — | — | (0.44 | ) | 0.76 | 8.03 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 9.46 | 0.49 | — | (2.19 | ) | (1.70 | ) | (0.49 | ) | — | — | (0.49 | ) | (2.19 | ) | 7.27 | ||||||||||||||||||||||||||||
B | 9.46 | 0.42 | — | (2.19 | ) | (1.77 | ) | (0.43 | ) | — | — | (0.43 | ) | (2.20 | ) | 7.26 | ||||||||||||||||||||||||||||
C | 9.46 | 0.42 | — | (2.18 | ) | (1.76 | ) | (0.43 | ) | — | — | (0.43 | ) | (2.19 | ) | 7.27 | ||||||||||||||||||||||||||||
I | 9.47 | 0.51 | — | (2.19 | ) | (1.68 | ) | (0.52 | ) | — | — | (0.52 | ) | (2.20 | ) | 7.27 | ||||||||||||||||||||||||||||
From (date shares became available to the public) May 31, 2007, through October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A(e) | 10.00 | 0.20 | — | (0.54 | ) | (0.34 | ) | (0.20 | ) | — | — | (0.20 | ) | (0.54 | ) | 9.46 | ||||||||||||||||||||||||||||
B(e) | 10.00 | 0.17 | — | (0.54 | ) | (0.37 | ) | (0.17 | ) | — | — | (0.17 | ) | (0.54 | ) | 9.46 | ||||||||||||||||||||||||||||
C(e) | 10.00 | 0.17 | — | (0.54 | ) | (0.37 | ) | (0.17 | ) | — | — | (0.17 | ) | (0.54 | ) | 9.46 | ||||||||||||||||||||||||||||
I(e) | 10.00 | 0.21 | — | (0.53 | ) | (0.32 | ) | (0.21 | ) | — | — | (0.21 | ) | (0.53 | ) | 9.47 |
(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) | Shares became available to the public on May 31, 2007. | |
(f) | Not annualized. | |
(g) | Annualized. |
24
- Ratios and Supplemental Data - | ||||||||||||||||||||||||||
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net | |||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio | |||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Turnover Rate(d) | ||||||||||||||||||||
16.93 | % | $ | 222,328 | 0.92 | % | 0.85 | % | 0.85 | % | 5.81 | % | 26 | % | |||||||||||||
16.00 | 7,523 | 1.75 | 1.68 | 1.68 | 4.97 | — | ||||||||||||||||||||
16.04 | 111,097 | 1.69 | 1.62 | 1.62 | 5.04 | — | ||||||||||||||||||||
17.30 | 70,162 | 0.69 | 0.62 | 0.62 | 6.04 | — | ||||||||||||||||||||
(18.60 | ) | 171,281 | 0.92 | 0.40 | 0.40 | 5.61 | 65 | |||||||||||||||||||
(19.36 | ) | 4,664 | 1.73 | 1.19 | 1.19 | 4.81 | — | |||||||||||||||||||
(19.24 | ) | 76,650 | 1.70 | 1.17 | 1.17 | 4.86 | — | |||||||||||||||||||
(18.50 | ) | 54,029 | 0.69 | 0.17 | 0.17 | 5.84 | — | |||||||||||||||||||
(3.41 | ) (f) | 46,261 | 1.03 | (g) | 0.25 | (g) | 0.25 | (g) | 4.83 | (g) | 23 | |||||||||||||||
(3.71 | ) (f) | 1,333 | 1.82 | (g) | 1.00 | (g) | 1.00 | (g) | 4.05 | (g) | — | |||||||||||||||
(3.71 | ) (f) | 11,236 | 1.81 | (g) | 1.00 | (g) | 1.00 | (g) | 4.19 | (g) | — | |||||||||||||||
(3.21 | ) (f) | 6,879 | 0.80 | (g) | — | (g) | — | (g) | 5.22 | (g) | — |
25
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
26
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
27
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 – 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 – 2009. |
28
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
29
Tax-Exempt | ||||||||||||
Income | Income | Total | ||||||||||
Class A | N/A | 0.425 | 0.425 | |||||||||
Class B | N/A | 0.366 | 0.366 | |||||||||
Class C | N/A | 0.369 | 0.369 | |||||||||
Class I | N/A | 0.440 | 0.440 |
30
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,152.90 | $ | 5.05 | $ | 1,000.00 | $ | 1,020.52 | $ | 4.74 | 0.93 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,146.80 | $ | 9.47 | $ | 1,000.00 | $ | 1,016.38 | $ | 8.89 | 1.75 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,148.50 | $ | 9.21 | $ | 1,000.00 | $ | 1,016.64 | $ | 8.64 | 1.70 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,154.00 | $ | 3.80 | $ | 1,000.00 | $ | 1,021.68 | $ | 3.57 | 0.70 | 184 | 365 |
31
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
32
33
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited — (continued)
34
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Income Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
12 | ||||
13 | ||||
14 | ||||
15 | ||||
16 | ||||
28 | ||||
30 | ||||
31 | ||||
33 | ||||
33 | ||||
34 | ||||
35 | ||||
36 |
The Hartford Income Fund inception 10/31/2002 | ||
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks to provide a high level of current | |
income. Capital appreciation is a secondary objective. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
Income A# | 21.83 | % | 3.14 | % | 4.72 | % | ||||||
Income A## | 16.34 | % | 2.19 | % | 4.04 | % | ||||||
Income B# | 20.85 | % | 2.36 | % | 3.94 | % | ||||||
Income B## | 15.85 | % | 2.03 | % | 3.94 | % | ||||||
Income C# | 20.76 | % | 2.35 | % | 3.97 | % | ||||||
Income C## | 19.76 | % | 2.35 | % | 3.97 | % | ||||||
Income Y# | 22.07 | % | 3.39 | % | 3.96 | % | ||||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 5.05 | % | 5.10 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. | |
(5) | Class Y shares commened operations on 11/28/03. |
Portfolio Managers | ||||
William H. Davison, Jr. | Michael Gray, CFA | Christopher J. Zeppieri, CFA | ||
Managing Director | Managing Director | Vice President |
2
as of October 31, 2009
Percentage of | ||||
Long Term | ||||
Rating | Holdings | |||
AAA | 55.8 | % | ||
AA | 3.1 | |||
A | 13.4 | |||
BBB | 14.3 | |||
BB | 7.3 | |||
B | 4.6 | |||
CCC | 1.5 | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
Industry | Net Assets | |||
Accommodation and Food Services | 0.2 | % | ||
Administrative Waste Management and Remediation | 0.4 | |||
Agriculture, Forestry, Fishing and Hunting | 0.0 | |||
Air Transportation | 0.1 | |||
Arts, Entertainment and Recreation | 1.9 | |||
Beverage and Tobacco Product Manufacturing | 1.1 | |||
Chemical Manufacturing | 1.2 | |||
Computer and Electronic Product Manufacturing | 0.2 | |||
Construction | 0.5 | |||
Educational Services | 0.2 | |||
Finance and Insurance | 22.1 | |||
Food Manufacturing | 0.4 | |||
Foreign Governments | 1.2 | |||
Health Care and Social Assistance | 2.5 | |||
Information | 5.4 | |||
Long Put Future Option Contract | 0.0 | |||
Mining | 1.2 | |||
Miscellaneous Manufacturing | 1.3 | |||
Motor Vehicle & Parts Manufacturing | 0.0 | |||
Nonmetallic Mineral Product Manufacturing | 0.1 | |||
Paper Manufacturing | 0.3 | |||
Petroleum and Coal Products Manufacturing | 3.6 | |||
Pipeline Transportation | 0.8 | |||
Primary Metal Manufacturing | 1.3 | |||
Printing and Related Support Activities | 0.0 | |||
Professional, Scientific and Technical Services | 0.5 | |||
Rail Transportation | 0.1 | |||
Real Estate and Rental and Leasing | 1.0 | |||
Retail Trade | 0.8 | |||
Soap, Cleaning Compound and Toilet Manufacturing | 0.4 | |||
Transit and Ground Passenger Transportation | 0.0 | |||
Transportation | 0.5 | |||
U.S. Government Agencies | 30.0 | |||
U.S. Government Securities | 14.3 | |||
Utilities | 2.8 | |||
Water Transportation | 0.1 | |||
Wholesale Trade | 0.2 | |||
Short-Term Investments | 10.0 | |||
Other Assets and Liabilities | (6.7 | ) | ||
Total | 100.0 | % | ||
3
October 31, 2009
Shares or Principal Amount | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 9.4% | ||||||||
Finance and Insurance - 9.4% | ||||||||
Ally Automotive Receivables Trust | ||||||||
$ | 50 | 3.00%, 10/15/2015 ■ | $ | 50 | ||||
Banc of America Commercial Mortgage, Inc. | ||||||||
2,531 | 5.50%, 11/10/2039 ⌂► | 53 | ||||||
6,439 | 5.75%, 06/10/2039 ⌂► | 36 | ||||||
Bank of America Automotive Trust | ||||||||
100 | 3.03%, 10/15/2016 ■ | 101 | ||||||
Bayview Commercial Asset Trust | ||||||||
200 | 0.61%, 04/25/2036 ■Δ | 114 | ||||||
5,258 | 7.00%, 07/25/2037 ⌂► | 409 | ||||||
9,653 | 7.50%, 09/25/2037 ⌂► | 774 | ||||||
Bear Stearns Commercial Mortgage Securities, Inc. | ||||||||
345 | 4.68%, 08/13/2039 | 347 | ||||||
540 | 5.12%, 02/11/2041 Δ | 535 | ||||||
1,650 | 5.30%, 10/12/2042 Δ | 1,670 | ||||||
1,700 | 5.33%, 02/11/2044 | 1,550 | ||||||
600 | 5.90%, 09/11/2038 Δ | 611 | ||||||
CBA Commercial Small Balance Commercial Mortgage | ||||||||
5,891 | 3.00%, 01/25/2039 ⌂► | 236 | ||||||
4,672 | 7.00%, 07/25/2035 - 06/25/2038 ⌂►† | 323 | ||||||
Chase Issuance Trust | ||||||||
360 | 5.12%, 10/15/2014 | 391 | ||||||
Citigroup Commercial Mortgage Trust | ||||||||
160 | 5.89%, 12/10/2049 Δ | 117 | ||||||
Citigroup Mortgage Loan Trust, Inc. | ||||||||
164 | 2.75%, 01/25/2037 ■Δ | — | ||||||
Citigroup/Deutsche Bank Commercial Mortgage Trust | ||||||||
740 | 5.89%, 11/15/2044 | 731 | ||||||
Commercial Mortgage Pass-Through Certificates | ||||||||
210 | 4.72%, 03/10/2039 | 208 | ||||||
570 | 5.46%, 07/10/2037 Δ | 572 | ||||||
4,941 | 5.50%, 03/10/2039 ⌂► | 107 | ||||||
Countrywide Asset-Backed Certificates | ||||||||
43 | 5.46%, 07/25/2035 | 18 | ||||||
Credit-Based Asset Servicing and Securitization | ||||||||
189 | 0.51%, 05/25/2036 ■Δ | 117 | ||||||
CS First Boston Mortgage Securities Corp. | ||||||||
290 | 5.23%, 12/15/2040 | 288 | ||||||
Equity One ABS, Inc. | ||||||||
3 | 2.74%, 07/25/2034 Δ | — | ||||||
27 | 5.46%, 12/25/2033 | 5 | ||||||
Ford Credit Automotive Owner Trust | ||||||||
600 | 4.28%, 05/15/2012 | 617 | ||||||
GE Business Loan Trust | ||||||||
5,049 | 6.14%, 05/15/2034 ⌂► | 14 | ||||||
GE Capital Commercial Mortgage Corp. | ||||||||
330 | 5.05%, 07/10/2045 Δ | 332 | ||||||
53,935 | 6.35%, 11/10/2045 ⌂► | 44 | ||||||
GMAC Commercial Mortgage Securities, Inc. | ||||||||
200 | 5.30%, 08/10/2038 | 202 | ||||||
GMAC Mortgage Corp. Loan Trust | ||||||||
176 | 5.75%, 10/25/2036 | 129 | ||||||
Green Tree Financial Corp. | ||||||||
1 | 7.30%, 01/15/2026 | 1 | ||||||
7 | 7.35%, 05/15/2027 | 7 | ||||||
Greenwich Capital Commercial Funding Corp. | ||||||||
387 | 0.00%, 11/05/2021 ⌂•Δ | 2 | ||||||
970 | 4.80%, 08/10/2042 | 926 | ||||||
475 | 5.44%, 03/10/2039 Δ | 424 | ||||||
640 | 6.12%, 07/10/2038 Δ | 614 | ||||||
JP Morgan Automotive Receivable Trust | ||||||||
75 | 12.85%, 03/15/2012 ⌂† | 19 | ||||||
JP Morgan Chase Commercial Mortgage Securities Corp. | ||||||||
278 | 4.72%, 01/15/2038 | 273 | ||||||
535 | 5.04%, 03/15/2046 Δ | 535 | ||||||
1,550 | 5.34%, 12/15/2044 Δ | 1,556 | ||||||
550 | 5.34%, 05/15/2047 | 495 | ||||||
240 | 5.40%, 05/15/2045 | 223 | ||||||
502 | 5.47%, 04/15/2043 Δ | 488 | ||||||
2,057 | 5.50%, 01/15/2038 ⌂► | 51 | ||||||
190 | 6.16%, 05/12/2034 | 200 | ||||||
LB-UBS Commercial Mortgage Trust | ||||||||
213 | 4.48%, 10/15/2029 | 209 | ||||||
20,420 | 5.26%, 06/15/2036 ⌂► | 42 | ||||||
210 | 5.88%, 06/15/2038 Δ | 207 | ||||||
Lehman Brothers Small Balance Commercial | ||||||||
120 | 5.62%, 09/25/2036 ■ | 100 | ||||||
Long Beach Asset Holdings Corp. | ||||||||
45 | 0.00%, 04/25/2046 ■• | — | ||||||
Marlin Leasing Receivables LLC | ||||||||
227 | 5.33%, 09/16/2013 ■ | 227 | ||||||
Merrill Lynch Mortgage Trust | ||||||||
113 | 5.83%, 06/12/2050 Δ | 97 | ||||||
Merrill Lynch/Countrywide Commercial Mortgage Trust | ||||||||
270 | 5.38%, 08/12/2048 | 212 | ||||||
Morgan Stanley Capital I | ||||||||
560 | 4.70%, 07/15/2056 | 553 | ||||||
540 | 5.01%, 01/14/2042 | 547 | ||||||
Nationstar Home Equity Loan Trust | ||||||||
22 | 0.00%, 03/25/2037 ⌂• | — | ||||||
PSE&G Transition Funding LLC | ||||||||
70 | 6.61%, 06/15/2015 | 79 | ||||||
Renaissance Home Equity Loan Trust | ||||||||
401 | 5.58%, 11/25/2036 Δ | 351 | ||||||
78 | 5.75%, 05/25/2036 Δ | 60 | ||||||
200 | 6.16%, 05/25/2036 | 34 | ||||||
Residential Funding Mortgage Securities, Inc. | ||||||||
1,252 | 6.00%, 07/25/2037 | 1,061 | ||||||
USAA Automotive Owner Trust | ||||||||
698 | 5.36%, 06/15/2012 | 715 | ||||||
Wachovia Automotive Loan Owner Trust | ||||||||
250 | 5.15%, 07/20/2012 ■ | 255 | ||||||
260 | 5.29%, 06/20/2012 ■ | 265 | ||||||
Wachovia Bank Commercial Mortgage Trust | ||||||||
505 | 5.31%, 11/15/2048 | 489 | ||||||
529 | 5.34%, 12/15/2043 | 408 | ||||||
210 | 5.41%, 07/15/2041 Δ | 211 | ||||||
6,071 | 5.50%, 02/15/2041 ⌂► | 127 | ||||||
Wamu Commercial Mortgage Securities Trust | ||||||||
1,220 | 6.31%, 03/23/2045 ■ΔΨ | 411 |
4
Shares or Principal Amount | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 9.4% - (continued) | ||||||||
Finance and Insurance - 9.4% - (continued) | ||||||||
Wells Fargo Alternative Loan Trust | ||||||||
$ | 899 | 6.25%, 11/25/2037 ⌂ | $ | 659 | ||||
23,834 | ||||||||
Utilities - 0.0% | ||||||||
Detroit Edison Securitization | ||||||||
40 | 6.19%, 03/01/2013 | 42 | ||||||
Total asset & commercial mortgage backed securities (cost $24,740) | $ | 23,876 | ||||||
CORPORATE BONDS: INVESTMENT GRADE - 29.9% | ||||||||
Administrative Waste Management and Remediation - 0.3% | ||||||||
Allied Waste North America, Inc. | ||||||||
$ | 385 | 6.88%, 06/01/2017 | $ | 408 | ||||
390 | 7.25%, 03/15/2015 | 410 | ||||||
818 | ||||||||
Air Transportation - 0.0% | ||||||||
United Air Lines, Inc. | ||||||||
73 | 7.19%, 04/01/2011 | 72 | ||||||
Arts, Entertainment and Recreation - 0.7% | ||||||||
News America Holdings, Inc. | ||||||||
337 | 6.90%, 08/15/2039 ■ | 358 | ||||||
Time Warner Entertainment Co., L.P. | ||||||||
1,210 | 8.38%, 07/15/2033 | 1,451 | ||||||
1,809 | ||||||||
Beverage and Tobacco Product Manufacturing - 1.0% | ||||||||
Altria Group, Inc. | ||||||||
790 | 10.20%, 02/06/2039 | 1,053 | ||||||
Anheuser-Busch Cos., Inc. | ||||||||
280 | 8.20%, 01/15/2039 ■ | 353 | ||||||
Anheuser-Busch InBev N.V. | ||||||||
955 | 7.75%, 01/15/2019 ■ | 1,113 | ||||||
2,519 | ||||||||
Chemical Manufacturing - 1.0% | ||||||||
Dow Chemical Co. | ||||||||
1,550 | 8.55%, 05/15/2019 | 1,769 | ||||||
Yara International ASA | ||||||||
770 | 7.88%, 06/11/2019 ■ | 878 | ||||||
2,647 | ||||||||
Construction - 0.2% | ||||||||
CRH America, Inc. | ||||||||
330 | 8.13%, 07/15/2018 | 381 | ||||||
Educational Services - 0.2% | ||||||||
President & Fellows of Harvard | ||||||||
368 | 6.00%, 01/15/2019 ■ | 416 | ||||||
Finance and Insurance - 11.8% | ||||||||
ABX Financing Co. | ||||||||
365 | 6.35%, 10/15/2036 ■ | 380 | ||||||
Bank of America Corp. | ||||||||
2,000 | 2.10%, 04/30/2012 | 2,033 | ||||||
715 | 6.50%, 08/01/2016 | 765 | ||||||
355 | 7.38%, 05/15/2014 | 398 | ||||||
Barclays Bank plc | ||||||||
670 | 6.05%, 12/04/2017 ■ | 682 | ||||||
Capital One Bank | ||||||||
1,370 | 8.80%, 07/15/2019 | 1,623 | ||||||
Citigroup, Inc. | ||||||||
550 | 2.13%, 04/30/2012 | 561 | ||||||
477 | 6.38%, 08/12/2014 | 506 | ||||||
510 | 8.13%, 07/15/2039 | 593 | ||||||
842 | 8.50%, 05/22/2019 | 984 | ||||||
Comerica Capital Trust II | ||||||||
1,066 | 6.58%, 02/20/2037 Δ | 768 | ||||||
Corpoacion Andina De Fomento | ||||||||
90 | 8.13%, 06/04/2019 | 107 | ||||||
Credit Agricole S.A. | ||||||||
835 | 6.64%, 05/31/2017 ■♠Δ | 660 | ||||||
Deutsche Bank Capital Funding Trust | ||||||||
90 | 5.63%, 01/19/2016 ■♠ | 68 | ||||||
Goldman Sachs Capital Trust II | ||||||||
2,007 | 5.79%, 06/01/2012 ♠Δ | 1,493 | ||||||
Guardian Life Insurance Co. | ||||||||
1,079 | 7.38%, 09/30/2039 ■ | 1,091 | ||||||
Jefferies Group, Inc. | ||||||||
904 | 8.50%, 07/15/2019 | 982 | ||||||
JP Morgan Chase & Co. | ||||||||
430 | 6.30%, 04/23/2019 | 472 | ||||||
JP Morgan Chase Capital II | ||||||||
210 | 0.98%, 02/01/2027 Δ | 149 | ||||||
JP Morgan Chase Capital XXV | ||||||||
698 | 6.80%, 10/01/2037 | 687 | ||||||
Key Bank NA | ||||||||
1,705 | 5.80%, 07/01/2014 | 1,678 | ||||||
715 | 6.95%, 02/01/2028 | 628 | ||||||
Lincoln National Corp. | ||||||||
530 | 6.05%, 04/20/2067 | 411 | ||||||
Manufacturers & Traders Trust Co. | ||||||||
605 | 5.59%, 12/28/2020 | 499 | ||||||
Massachusetts Mutual Life Insurance Co. | ||||||||
330 | 8.88%, 06/01/2039 ■ | 402 | ||||||
MBNA America Bank N.A. | ||||||||
505 | 7.13%, 11/15/2012 | 549 | ||||||
Mellon Capital IV | ||||||||
764 | 6.24%, 06/20/2012 ♠Δ | 598 | ||||||
Morgan Stanley | ||||||||
1,190 | 7.30%, 05/13/2019 | 1,333 | ||||||
New York Life Insurance Co. | ||||||||
1,083 | 6.75%, 11/15/2039 ■ | 1,098 | ||||||
Northgroup Preferred Capital Corp. | ||||||||
638 | 6.38%, 10/15/2017 ■♠Δ | 553 | ||||||
PNC Preferred Funding Trust II | ||||||||
1,200 | 6.11%, 03/15/2012 ■♠Δ | 812 | ||||||
Progressive Corp. | ||||||||
225 | 6.70%, 06/15/2037 Δ | 197 | ||||||
Prudential Financial, Inc. | ||||||||
224 | 7.38%, 06/15/2019 | 250 | ||||||
Rabobank Netherlands | ||||||||
219 | 11.00%, 06/30/2019 ■♠ | 275 | ||||||
Shurgard Storage Centers, Inc. | ||||||||
75 | 5.88%, 03/15/2013 | 76 | ||||||
Simon Property Group L.P. | ||||||||
351 | 6.75%, 05/15/2014 | 378 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - - 29.9% - (continued) | ||||||||
Finance and Insurance - 11.8% - (continued) | ||||||||
State Street Capital Trust III | ||||||||
$ | 1,015 | 8.25%, 03/15/2042 Δ | $ | 1,024 | ||||
State Street Capital Trust IV | ||||||||
735 | 1.30%, 06/15/2037 Δ | 493 | ||||||
Transcapitalinvest Ltd. | ||||||||
400 | 5.67%, 03/05/2014 § | 394 | ||||||
UBS Preferred Funding Trust I | ||||||||
1,920 | 8.62%, 10/01/2010 ♠ | 1,785 | ||||||
USB Capital IX | ||||||||
1,300 | 6.19%, 04/15/2011 ♠Δ | 998 | ||||||
Wells Fargo Bank NA | ||||||||
555 | 0.65%, 05/16/2016 Δ | 480 | ||||||
Westpac Capital Trust IV | ||||||||
100 | 5.26%, 03/31/2016 ■♠ | 79 | ||||||
ZFS Finance USA Trust I | ||||||||
182 | 6.50%, 05/09/2037 ■Δ | 147 | ||||||
30,139 | ||||||||
Foreign Governments - 0.4% | ||||||||
Banco Nacional De Desenvolvimento | ||||||||
200 | 6.50%, 06/10/2019 ■ | 211 | ||||||
Colombia (Republic of) | ||||||||
100 | 7.38%, 03/18/2019 | 113 | ||||||
El Salvador (Republic of) | ||||||||
282 | 7.65%, 06/15/2035 § | 282 | ||||||
Hungary (Republic of) | ||||||||
380 | 4.75%, 02/03/2015 | 376 | ||||||
982 | ||||||||
Health Care and Social Assistance - 1.2% | ||||||||
Amgen, Inc. | ||||||||
236 | 6.40%, 02/01/2039 | 270 | ||||||
CVS Corp. | ||||||||
1,056 | 8.35%, 07/10/2031 ■ | 1,199 | ||||||
Pfizer, Inc. | ||||||||
515 | 6.20%, 03/15/2019 | 586 | ||||||
535 | 7.20%, 03/15/2039 | 672 | ||||||
Roche Holdings, Inc. | ||||||||
255 | 7.00%, 03/01/2039 ■ | 313 | ||||||
3,040 | ||||||||
Information - 2.4% | ||||||||
AT&T, Inc. | ||||||||
455 | 6.55%, 02/15/2039 | 492 | ||||||
Cingular Wireless Services, Inc. | ||||||||
210 | 8.13%, 05/01/2012 | 240 | ||||||
455 | 8.75%, 03/01/2031 | 600 | ||||||
France Telecom S.A. | ||||||||
150 | 7.75%, 03/01/2011 ‡Δ | 162 | ||||||
Hanaro Telecom, Inc. | ||||||||
140 | 7.00%, 02/01/2012 ■ | 145 | ||||||
Rogers Cable, Inc. | ||||||||
205 | 8.75%, 05/01/2032 | 263 | ||||||
Rogers Communications, Inc. | ||||||||
931 | 7.50%, 03/15/2015 | 1,082 | ||||||
Telecom Italia Capital | ||||||||
279 | 7.18%, 06/18/2019 | 310 | ||||||
797 | 7.72%, 06/04/2038 | 924 | ||||||
Time Warner Cable, Inc. | ||||||||
52 | 8.25%, 04/01/2019 | 63 | ||||||
Verizon Wireless | ||||||||
1,467 | 8.50%, 11/15/2018 ■ | 1,828 | ||||||
6,109 | ||||||||
Mining - 1.0% | ||||||||
Anglo American Capital plc | ||||||||
852 | 9.38%, 04/08/2014 ■ | 995 | ||||||
Barrick Gold Corp. | ||||||||
170 | 6.95%, 04/01/2019 | 194 | ||||||
Rio Tinto Finance USA Ltd. | ||||||||
880 | 5.88%, 07/15/2013 | 948 | ||||||
265 | 9.00%, 05/01/2019 | 330 | ||||||
2,467 | ||||||||
Miscellaneous Manufacturing - 0.9% | ||||||||
Meccanica Holdings USA, Inc. | ||||||||
1,257 | 6.25%, 07/15/2019 - 01/15/2040 ■ | 1,320 | ||||||
Tyco International Ltd. | ||||||||
792 | 8.50%, 01/15/2019 | 966 | ||||||
2,286 | ||||||||
Nonmetallic Mineral Product Manufacturing - 0.1% | ||||||||
Holcim Ltd. | ||||||||
199 | 6.00%, 12/30/2019 ■ | 205 | ||||||
Petroleum and Coal Products Manufacturing - 3.1% | ||||||||
Anadarko Petroleum Corp. | ||||||||
635 | 6.45%, 09/15/2036 | 661 | ||||||
Cenovus Energy, Inc. | ||||||||
780 | 6.75%, 11/15/2039 ■ | 852 | ||||||
ConocoPhillips | ||||||||
875 | 6.50%, 02/01/2039 | 979 | ||||||
Diamond Offshore Drilling, Inc. | ||||||||
441 | 5.70%, 10/15/2039 | 431 | ||||||
EnCana Corp. | ||||||||
110 | 6.50%, 05/15/2019 | 122 | ||||||
Gazprom International S.A. | ||||||||
105 | 7.20%, 02/01/2020 § | 108 | ||||||
Husky Energy, Inc. | ||||||||
315 | 7.25%, 12/15/2019 | 364 | ||||||
Nabors Industries, Inc. | ||||||||
537 | 9.25%, 01/15/2019 | 649 | ||||||
Petrobras International Finance Co. | ||||||||
770 | 6.88%, 01/20/2040 | 769 | ||||||
Sempra Energy | ||||||||
560 | 6.50%, 06/01/2016 | 615 | ||||||
588 | 9.80%, 02/15/2019 | 750 | ||||||
TNK-BP Finance S.A. | ||||||||
200 | 6.63%, 03/20/2017 § | 191 | ||||||
Valero Energy Corp. | ||||||||
1,120 | 6.63%, 06/15/2037 | 1,028 | ||||||
385 | 9.38%, 03/15/2019 | 456 | ||||||
7,975 | ||||||||
Pipeline Transportation - 0.6% | ||||||||
Kinder Morgan Energy Partners L.P. | ||||||||
230 | 6.50%, 02/01/2037 | 232 | ||||||
350 | 6.95%, 01/15/2038 | 375 | ||||||
Tennessee Gas Pipeline Co. | ||||||||
100 | 8.38%, 06/15/2032 | 119 | ||||||
TransCanada Pipelines Ltd. | ||||||||
705 | 7.25%, 08/15/2038 | 857 | ||||||
1,583 | ||||||||
6
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - - 29.9% - (continued) | ||||||||
Primary Metal Manufacturing - 1.3% | ||||||||
Alcan, Inc. | ||||||||
$ | 240 | 6.13%, 12/15/2033 | $ | 242 | ||||
ArcelorMittal | ||||||||
1,870 | 7.00%, 10/15/2039 | 1,768 | ||||||
1,135 | 9.00%, 02/15/2015 | 1,311 | ||||||
3,321 | ||||||||
Rail Transportation - 0.1% | ||||||||
Canadian Pacific Railway Co. | ||||||||
202 | 7.25%, 05/15/2019 | 233 | ||||||
Real Estate and Rental and Leasing - 1.0% | ||||||||
American Real Estate Partners L.P. | ||||||||
390 | 7.13%, 02/15/2013 | 383 | ||||||
COX Communications, Inc. | ||||||||
350 | 6.25%, 06/01/2018 ■ | 368 | ||||||
300 | 8.38%, 03/01/2039 ■ | 360 | ||||||
ERAC USA Finance Co. | ||||||||
946 | 5.60%, 05/01/2015 ■ | 955 | ||||||
US Bank Realty Corp. | ||||||||
625 | 6.09%, 01/15/2012 ■♠Δ | 436 | ||||||
2,502 | ||||||||
Retail Trade - 0.2% | ||||||||
Ahold Lease USA, Inc. | ||||||||
617 | 8.62%, 01/02/2025 | 620 | ||||||
Utilities - 2.3% | ||||||||
CenterPoint Energy Resources Corp. | ||||||||
207 | 6.63%, 11/01/2037 | 209 | ||||||
Commonwealth Edison Co. | ||||||||
1,405 | 5.80%, 03/15/2018 | 1,517 | ||||||
Duke Energy Corp. | ||||||||
441 | 6.35%, 08/15/2038 | 506 | ||||||
250 | 7.00%, 11/15/2018 | 297 | ||||||
Electricite de France | ||||||||
560 | 6.95%, 01/26/2039 ■ | 679 | ||||||
Enel Finance International S.A. | ||||||||
1,013 | 6.00%, 10/07/2039 ■ | 1,036 | ||||||
Exelon Generation Co. LLC | ||||||||
415 | 6.25%, 10/01/2039 | 433 | ||||||
Florida Power Corp. | ||||||||
296 | 5.80%, 09/15/2017 | 326 | ||||||
Pacific Gas & Electric Energy Recovery Funding LLC | ||||||||
701 | 8.25%, 10/15/2018 | 882 | ||||||
5,885 | ||||||||
Water Transportation - 0.1% | ||||||||
Carnival Corp. | ||||||||
110 | 6.65%, 01/15/2028 | 113 | ||||||
Total corporate bonds: investment grade (cost $70,621) | $ | 76,122 | ||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 9.4% | ||||||||
Accommodation and Food Services - 0.2% | ||||||||
Ameristar Casinos, Inc. | ||||||||
$ | 175 | 9.25%, 06/01/2014 ■ | $ | 182 | ||||
MGM Mirage, Inc. | ||||||||
105 | 10.38%, 05/15/2014 ■ | 112 | ||||||
130 | 11.13%, 11/15/2017 ■ | 143 | ||||||
437 | ||||||||
Agriculture, Forestry, Fishing and Hunting - 0.0% | ||||||||
Tyson Foods, Inc. | ||||||||
115 | 10.50%, 03/01/2014 | 131 | ||||||
Air Transportation - 0.1% | ||||||||
Continental Airlines, Inc. | ||||||||
100 | 6.56%, 02/15/2012 | 95 | ||||||
69 | 6.80%, 08/02/2018 | 62 | ||||||
157 | ||||||||
Arts, Entertainment and Recreation - 0.7% | ||||||||
AMC Entertainment, Inc. | ||||||||
500 | 11.00%, 02/01/2016 | 525 | ||||||
Echostar DBS Corp. | ||||||||
110 | 7.75%, 05/31/2015 | 112 | ||||||
FireKeepers Development Authority | ||||||||
500 | 13.88%, 05/01/2015 ■ | 540 | ||||||
Pinnacle Entertainment, Inc. | ||||||||
160 | 8.63%, 08/01/2017 ■ | 159 | ||||||
Virgin Media, Inc. | ||||||||
340 | 6.50%, 11/15/2016 ۞ ■ | 360 | ||||||
1,696 | ||||||||
Beverage and Tobacco Product Manufacturing - 0.1% | ||||||||
Constellation Brands, Inc. | ||||||||
160 | 8.38%, 12/15/2014 | 169 | ||||||
Chemical Manufacturing - 0.1% | ||||||||
Ashland, Inc. | ||||||||
170 | 9.13%, 06/01/2017 ■ | 184 | ||||||
Computer and Electronic Product Manufacturing - 0.2% | ||||||||
Seagate Technology International | ||||||||
505 | 10.00%, 05/01/2014 ■ | 561 | ||||||
Construction - 0.3% | ||||||||
Desarrolladora Homes S.A. | ||||||||
147 | 7.50%, 09/28/2015 | 143 | ||||||
KB Home & Broad Home Corp. | ||||||||
200 | 6.38%, 08/15/2011 | 200 | ||||||
Odebrecht Finance Ltd. | ||||||||
373 | 7.00%, 04/21/2020 ■ | 353 | ||||||
696 | ||||||||
Finance and Insurance - 0.9% | ||||||||
Ford Motor Credit Co. | ||||||||
475 | 7.50%, 08/01/2012 | 463 | ||||||
Lloyds Banking Group plc | ||||||||
500 | 5.92%, 10/01/2015 ■♠ | 315 | ||||||
LPL Holdings, Inc. | ||||||||
1,530 | 10.75%, 12/15/2015 ■ | 1,549 | ||||||
2,327 | ||||||||
Foreign Governments - 0.8% | ||||||||
Argentina (Republic of) | ||||||||
493 | 7.00%, 10/03/2015 | 367 | ||||||
Indonesia (Republic of) | ||||||||
255 | 6.88%, 01/17/2018 § | 271 | ||||||
Philippines (Republic of) | ||||||||
100 | 6.38%, 10/23/2034 | 98 | ||||||
200 | 6.50%, 01/20/2020 | 212 | ||||||
100 | 8.38%, 06/17/2019 | 121 | ||||||
Turkey (Republic of) | ||||||||
478 | 7.25%, 03/15/2015 | 533 |
7
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 9.4% - (continued) | ||||||||
Foreign Governments - 0.8% - (continued) | ||||||||
Venezuela (Republic of) | ||||||||
$ | 623 | 5.75%, 02/26/2016 § | $ | 419 | ||||
2,021 | ||||||||
Health Care and Social Assistance - 0.8% | ||||||||
HCA, Inc. | ||||||||
255 | 8.50%, 04/15/2019 ■ | 270 | ||||||
165 | 9.25%, 11/15/2016 | 173 | ||||||
IASIS Healthcare Capital Corp. | ||||||||
490 | 8.75%, 06/15/2014 | 502 | ||||||
Inverness Medical Innovation, Inc. | ||||||||
295 | 9.00%, 05/15/2016 | 299 | ||||||
Psychiatric Solutions, Inc. | ||||||||
215 | 7.75%, 07/15/2015 | 212 | ||||||
Warner Chilcott Corp. | ||||||||
500 | 8.75%, 02/01/2015 | 518 | ||||||
1,974 | ||||||||
Information - 2.2% | ||||||||
Canwest MediaWorks L.P. | ||||||||
400 | 0.00%, 08/01/2015 ■• | 80 | ||||||
Charter Communications Operating LLC | ||||||||
415 | 10.00%, 04/30/2012 ■Ψ | 421 | ||||||
Citizens Communications Co. | ||||||||
440 | 9.00%, 08/15/2031 | 434 | ||||||
CSC Holdings, Inc. | ||||||||
425 | 8.50%, 04/15/2014 ■ | 449 | ||||||
Frontier Communications Corp. | ||||||||
225 | 8.25%, 05/01/2014 | 231 | ||||||
Intelsat Bermuda Ltd. | ||||||||
730 | 9.25%, 06/15/2016 ⌂ | 701 | ||||||
Intelsat Corp. | ||||||||
600 | 9.25%, 06/15/2016 | 610 | ||||||
Level 3 Financing, Inc. | ||||||||
265 | 12.25%, 03/15/2013 | 276 | ||||||
MetroPCS Wireless, Inc. | ||||||||
720 | 9.25%, 11/01/2014 | 726 | ||||||
Qwest Communications International, Inc. | ||||||||
820 | 7.50%, 02/15/2014 | 804 | ||||||
Sprint Capital Corp. | ||||||||
140 | 8.75%, 03/15/2032 | 121 | ||||||
Windstream Corp. | ||||||||
685 | 8.63%, 08/01/2016 | 704 | ||||||
5,557 | ||||||||
Mining - 0.2% | ||||||||
Drummond Co., Inc. | ||||||||
390 | 7.38%, 02/15/2016 ■ | 357 | ||||||
Teck Resources Ltd. | ||||||||
215 | 10.75%, 05/15/2019 | 250 | ||||||
607 | ||||||||
Miscellaneous Manufacturing - 0.4% | ||||||||
Graham Packaging Co., Inc. | ||||||||
650 | 8.50%, 10/15/2012 | 655 | ||||||
L-3 Communications Corp. | ||||||||
340 | 5.88%, 01/15/2015 | 330 | ||||||
985 | ||||||||
Paper Manufacturing - 0.1% | ||||||||
Georgia-Pacific LLC | ||||||||
350 | 8.25%, 05/01/2016 ■ | 371 | ||||||
Petroleum and Coal Products Manufacturing - 0.5% | ||||||||
Chesapeake Energy Corp. | ||||||||
480 | 7.00%, 08/15/2014 | 484 | ||||||
245 | 9.50%, 02/15/2015 | 265 | ||||||
Headwaters, Inc. | ||||||||
260 | 11.38%, 11/01/2014 ■ | 261 | ||||||
Inergy L.P. | ||||||||
150 | 8.25%, 03/01/2016 | 152 | ||||||
1,162 | ||||||||
Pipeline Transportation - 0.2% | ||||||||
Copano Energy LLC | ||||||||
315 | 8.13%, 03/01/2016 | 308 | ||||||
El Paso Corp. | ||||||||
115 | 7.00%, 06/15/2017 | 115 | ||||||
423 | ||||||||
Printing and Related Support Activities - 0.0% | ||||||||
Sheridan Group, Inc. | ||||||||
150 | 10.25%, 08/15/2011 | 132 | ||||||
Professional, Scientific and Technical Services - 0.5% | ||||||||
Affinion Group, Inc. | ||||||||
1,200 | 11.50%, 10/15/2015 | 1,254 | ||||||
Retail Trade - 0.6% | ||||||||
Federated Retail Holdings, Inc. | ||||||||
100 | 5.90%, 12/01/2016 | 92 | ||||||
Parkson Retail Group Ltd. | ||||||||
460 | 7.88%, 11/14/2011 | 475 | ||||||
Supervalu, Inc. | ||||||||
140 | 8.00%, 05/01/2016 | 142 | ||||||
United Components, Inc. | ||||||||
1,000 | 9.38%, 06/15/2013 | 948 | ||||||
1,657 | ||||||||
Transit and Ground Passenger Transportation - 0.0% | ||||||||
Grupo Senda Autotransporte | ||||||||
100 | 10.50%, 10/03/2015 ■ | 81 | ||||||
Utilities - 0.3% | ||||||||
AES Corp. | ||||||||
110 | 8.00%, 10/15/2017 | 110 | ||||||
AES El Salvador Trust | ||||||||
200 | 6.75%, 02/01/2016 § | 172 | ||||||
NRG Energy, Inc. | ||||||||
275 | 7.25%, 02/01/2014 | 273 | ||||||
160 | 8.50%, 06/15/2019 | 162 | ||||||
717 | ||||||||
Wholesale Trade - 0.2% | ||||||||
SGS International, Inc. | ||||||||
150 | 12.00%, 12/15/2013 | 142 | ||||||
Supervalu, Inc. | ||||||||
420 | 7.50%, 11/15/2014 | 419 | ||||||
561 | ||||||||
Total corporate bonds: non-investment grade (cost $22,402) | $ | 23,860 | ||||||
8
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS - 0.5% | ||||||||
Transportation - 0.5% | ||||||||
Bay Area Toll Auth | ||||||||
$ | 675 | 6.26%, 04/01/2049 ☼ | $ | 682 | ||||
North Texas Tollway Auth Rev | ||||||||
584 | 6.72%, 01/01/2049 | 636 | ||||||
1,318 | ||||||||
Total municipal bonds (cost $1,273) | $ | 1,318 | ||||||
SENIOR FLOATING RATE INTERESTS: INVESTMENT GRADE♦ - 0.3% | ||||||||
Health Care and Social Assistance - 0.3% | ||||||||
Life Technologies Corp. | ||||||||
$ | 675 | 5.25%, 11/23/2015 ± | $ | 678 | ||||
Total senior floating rate interests: investment grade (cost $663) | $ | 678 | ||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE♦ - 2.9% | ||||||||
Administrative Waste Management and Remediation - 0.1% | ||||||||
Affinion Group, Inc. | ||||||||
$ | 183 | 2.74%, 10/17/2012 ± | $ | 175 | ||||
Arts, Entertainment and Recreation - 0.5% | ||||||||
Cedar Fair L.P. | ||||||||
72 | 2.24%, 08/30/2012 ± | 69 | ||||||
260 | 4.24%, 12/31/2014 ± | 251 | ||||||
Cenveo, Inc., Delayed Draw Term Loan | ||||||||
1 | 4.79%, 06/21/2013 ± | 1 | ||||||
Cenveo, Inc., Term Loan C | ||||||||
51 | 4.79%, 06/21/2013 ± | 50 | ||||||
R.H. Donnelley, Inc. | ||||||||
622 | 6.75%, 10/24/2014 ±Ψ | 539 | ||||||
Regal Cinemas, Inc. | ||||||||
317 | 4.03%, 10/27/2013 ± | 313 | ||||||
1,223 | ||||||||
Chemical Manufacturing - 0.1% | ||||||||
Huntsman International LLC | ||||||||
288 | 1.99%, 04/19/2014 ± | 261 | ||||||
Food Manufacturing - 0.4% | ||||||||
Dole Food Co., Inc. | ||||||||
94 | 0.28%, 04/12/2013 ± | 95 | ||||||
164 | 7.97%, 04/12/2013 ± | 165 | ||||||
588 | 8.00%, 04/12/2013 ± | 592 | ||||||
Roundy’s Supermarkets, Inc. | ||||||||
109 | 3.02%, 11/03/2011 ± | 108 | ||||||
960 | ||||||||
Health Care and Social Assistance - 0.2% | ||||||||
HCA, Inc. | ||||||||
319 | 1.53%, 11/17/2012 ± | 296 | ||||||
259 | 2.53%, 11/17/2013 ± | 240 | ||||||
Skilled Healthcare Group, Inc. | ||||||||
74 | 2.28%, 06/15/2012 ± | 69 | ||||||
605 | ||||||||
Information - 0.8% | ||||||||
Charter Communications Operating LLC | ||||||||
459 | 6.25%, 03/06/2014 ±Ψ | 417 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2A | ||||||||
62 | 2.75%, 01/03/2014 ± | 58 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2B | ||||||||
62 | 2.75%, 01/03/2014 ± | 58 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2C | ||||||||
62 | 2.75%, 01/03/2014 ± | 58 | ||||||
MetroPCS Wireless, Inc. | ||||||||
172 | 2.66%, 11/04/2013 ± | 161 | ||||||
Time Warner Telecom Holdings, Inc. | ||||||||
45 | 2.01%, 01/07/2013 ± | 43 | ||||||
UPC Financing Partnership | ||||||||
275 | 3.75%, 12/31/2016 ± | 264 | ||||||
West Corp. | ||||||||
493 | 7.25%, 10/24/2013 ± | 493 | ||||||
WideOpenWest Finance LLC | ||||||||
567 | 7.30%, 06/29/2015 ± | 434 | ||||||
1,986 | ||||||||
Motor Vehicle & Parts Manufacturing - 0.0% | ||||||||
AM General LLC | ||||||||
3 | 0.24%, 09/30/2012 ± | 3 | ||||||
62 | 3.27%, 09/30/2013 ± | 57 | ||||||
60 | ||||||||
Paper Manufacturing - 0.2% | ||||||||
Georgia-Pacific LLC | ||||||||
358 | 2.32%, 12/20/2012 ± | 344 | ||||||
197 | 3.59%, 12/20/2014 ± | 195 | ||||||
539 | ||||||||
Retail Trade - 0.0% | ||||||||
Michaels Stores, Inc. | ||||||||
184 | 2.52%, 10/31/2013 ± | 164 | ||||||
Soap, Cleaning Compound and Toilet Manufacturing - 0.4% | ||||||||
Jarden Corp. | ||||||||
988 | 3.53%, 01/24/2015 ± | 980 | ||||||
Utilities - 0.2% | ||||||||
Texas Competitive Electric Holdings Co. LLC | ||||||||
591 | 3.74%, 10/12/2014 ± | 453 | ||||||
Total senior floating rate interests: non-investment grade (cost $7,736) | $ | 7,406 | ||||||
U.S. GOVERNMENT AGENCIES - 30.0% | ||||||||
Federal Home Loan Mortgage Corporation - 10.5% | ||||||||
$ | 276 | 5.50%, 10/01/2032 | $ | 292 | ||||
19,374 | 6.00%, 01/15/2032 - 11/01/2037 | 20,375 | ||||||
5,681 | 6.50%, 05/01/2037 - 05/01/2038 □ | 6,100 | ||||||
26,767 | ||||||||
Federal National Mortgage Association - 19.2% | ||||||||
411 | 5.00%, 11/01/2017 - 01/01/2022 | 438 | ||||||
159 | 5.25%, 12/01/2035 Δ | 167 | ||||||
2,263 | 5.50%, 12/01/2032 - 10/01/2034 | 2,392 | ||||||
24,399 | 6.00%, 07/01/2036 - 05/01/2038 ☼ | 25,968 | ||||||
14,273 | 6.50%, 03/01/2036 - 08/01/2038 | 15,348 | ||||||
4,319 | 7.00%, 09/01/2038 | 4,717 | ||||||
49,030 | ||||||||
9
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
U.S. GOVERNMENT AGENCIES - 30.0% - (continued) | �� | |||||||||||
Other Government Agencies - 0.3% | ||||||||||||
Small Business Administration | ||||||||||||
Participation Certificates: | ||||||||||||
661 | 4.92%, 10/01/2023 | 698 | ||||||||||
Total U.S. government agencies (cost $73,782) | $ | 76,495 | ||||||||||
U.S. GOVERNMENT SECURITIES - 14.3% | ||||||||||||
U.S. Treasury Securities - 14.3% | ||||||||||||
U.S. Treasury Notes - 14.3% | ||||||||||||
$ | 18,916 | 1.00%, 09/30/2011 ‡ | $ | 18,969 | ||||||||
14,979 | 2.25%, 05/31/2014 | 15,044 | ||||||||||
1,109 | 3.63%, 08/15/2019 ‡ | 1,130 | ||||||||||
1,372 | 4.50%, 08/15/2039 ‡ | 1,433 | ||||||||||
36,576 | ||||||||||||
Total U.S. government securities (cost $36,310) | $ | 36,576 | ||||||||||
Contracts | Market Value ╪ | |||||||||||
PUT OPTIONS PURCHASED - 0.0% | ||||||||||||
Long Put Future Option Contract - 0.0% | ||||||||||||
U.S. 10 Year Note Option | ||||||||||||
— | Expiration: February, 2010, Exercise Price: | |||||||||||
$110.00 | $ | 34 | ||||||||||
Total put options purchased (cost $41) | $ | 34 | ||||||||||
Total long-term investments (cost $237,568) | $ | 246,365 | ||||||||||
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS - 10.0% | ||||||||||||
Investment Pools and Funds - 4.7% | ||||||||||||
11,971 | JP Morgan U.S. Government Money Market Fund | $ | 11,971 | |||||||||
— | State Street Bank U.S. Government Money Market Fund | — | ||||||||||
— | Wells Fargo Advantage Government Money Market Fund | — | ||||||||||
11,971 | ||||||||||||
Repurchase Agreements - 5.3% | ||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 11/02/2009 in the amount of $6,813, collateralized by U.S. Treasury Bond 5.25% - 7.88%, 2021 - 2029, value of $7,056) | ||||||||||||
$ | 6,813 | 0.06%, 10/30/2009 | 6,813 | |||||||||
RBS Greenwich Capital Markets TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $3,427, collateralized by U.S. Treasury Bond 5.00%, 2037, U.S. Treasury Note 3.13% - 4.63%, 2013 - 2017, value of $3,496) | ||||||||||||
3,427 | 0.06%, 10/30/2009 | 3,427 | ||||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 11/02/2009 in the amount of $3,139, collateralized by U.S. Treasury Note 1.50%, 2010, value of $3,182) | ||||||||||||
3,139 | 0.04%, 10/30/2009 | 3,139 | ||||||||||
13,379 | ||||||||||||
Total short-term investments (cost $25,350) | $ | 25,350 | ||||||||||
Total investments (cost $262,918) ▲ | 106.7 | % | $ | 271,715 | ||||||||
Other assets and liabilities | (6.7 | )% | (16,994 | ) | ||||||||
Total net assets | 100.0 | % | $ | 254,721 | ||||||||
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 7.7% of total net assets at October 31, 2009. | |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $263,146 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 14,960 | ||
Unrealized Depreciation | (6,391 | ) | ||
Net Unrealized Appreciation | $ | 8,569 | ||
† | 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 October 31, 2009, was $342, which represents 0.13% 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 October 31, 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 October 31, 2009, was $28,655, which represents 11.25% 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 determined to be liquid. At October 31, 2009, the market value of these securities amounted to $1,837 or 0.72% of total net assets. | |
♠ | Perpetual maturity security. Maturity date shown is the first call date. |
10
۞ | Convertible security. | |
► | The interest rates disclosed for interest only strips represent effective yields based upon estimated future cash flows at October 31, 2009. | |
☼ | The cost of securities purchased on a when-issued or delayed delivery basis at October 31, 2009 was $22,267. | |
± | The interest rate disclosed for these securities represents the average coupon as of October 31, 2009. | |
Ψ | The company is in bankruptcy. The investment held by the fund is current with respect to interest payments. | |
♦ | Senior loans 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. | |
□ | Security pledged as initial margin deposit for open futures contracts at October 31, 2009. |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
10 Year U.S. Treasury Note | 72 | Long | Dec 2009 | $ | 9 | |||||||||||
U.S. 2 Year Note | 31 | Long | Dec 2009 | $ | 25 | |||||||||||
U.S. 5 Year Note | 99 | Short | Dec 2009 | $ | (77 | ) | ||||||||||
U.S. Long Bond | 3 | Short | Dec 2009 | $ | 7 | |||||||||||
$ | (36 | ) | ||||||||||||||
* | 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 | |||||||
03/2004 | $ | 2,531 | Banc of America Commercial Mortgage, Inc., 5.50%, 11/10/2039 - 144A | $ | 52 | |||||
07/2004 | $ | 6,439 | Banc of America Commercial Mortgage, Inc., 5.75%, 06/10/2039 - 144A | 31 | ||||||
05/2007 - 02/2009 | $ | 5,258 | Bayview Commercial Asset Trust, 7.00%, 07/25/2037 - 144A | 717 | ||||||
08/2007 | $ | 9,653 | Bayview Commercial Asset Trust, 7.50%, 09/25/2037 - 144A | 1,308 | ||||||
11/2006 - 08/2007 | $ | 5,891 | CBA Commercial Small Balance Commercial Mortgage, 3.00%, 01/25/2039 - 144A | 507 | ||||||
04/2006 - 08/2007 | $ | 4,672 | CBA Commercial Small Balance Commercial Mortgage, 7.00%, 07/25/2035 - 06/25/2038 - 144A | 12 | ||||||
03/2004 | $ | 4,941 | Commercial Mortgage Pass-Through Certificates, 5.50%, 03/10/2039 - 144A | 124 | ||||||
06/2006 | $ | 5,049 | GE Business Loan Trust, 6.14%, 05/15/2034 - 144A | 9 | ||||||
12/2005 | $ | 53,935 | GE Capital Commercial Mortgage Corp., 6.35%, 11/10/2045 - 144A | 33 | ||||||
05/2007 | $ | 387 | Greenwich Capital Commercial Funding Corp., 0.00%, 11/05/2021 - 144A | 375 | ||||||
06/2006 - 06/2007 | $ | 730 | Intelsat Bermuda Ltd., 9.25%, 06/15/2016 | 766 | ||||||
03/2007 | $ | 75 | JP Morgan Automotive Receivable Trust, 12.85%, 03/15/2012 | 75 | ||||||
03/2004 - 08/2006 | $ | 2,057 | JP Morgan Chase Commercial Mortgage Securities Corp., 5.50%, 01/15/2038 - 144A | 51 | ||||||
04/2005 - 10/2007 | $ | 20,420 | LB-UBS Commercial Mortgage Trust, 5.26%, 06/15/2036 - 144A | 11 | ||||||
04/2007 | $ | 22 | Nationstar Home Equity Loan Trust, 0.00%, 03/25/2037 - 144A | 22 | ||||||
02/2004 | $ | 6,071 | Wachovia Bank Commercial Mortgage Trust, 5.50%, 02/15/2041 - 144A | 112 | ||||||
03/2008 | $ | 899 | Wells Fargo Alternative Loan Trust, 6.25%, 11/25/2037 | 726 |
The aggregate value of these securities at October 31, 2009 was $3,597 which represents 1.41% of total net assets. | ||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
11
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Asset & Commercial Mortgage Backed Securities | $ | 23,876 | $ | — | $ | 21,166 | $ | 2,710 | ||||||||
Corporate Bonds: Investment Grade | 76,122 | — | 75,430 | 692 | ||||||||||||
Corporate Bonds: Non-Investment Grade | 23,860 | — | 23,336 | 524 | ||||||||||||
Municipal Bonds | 1,318 | — | 1,318 | — | ||||||||||||
Put Options Purchased | 34 | 34 | — | — | ||||||||||||
Senior Floating Rate Interests: Investment Grade | 678 | — | 678 | — | ||||||||||||
Senior Floating Rate Interests: Non-Investment Grade | 7,406 | — | 7,406 | — | ||||||||||||
U.S. Government Agencies | 76,495 | — | 76,495 | — | ||||||||||||
U.S. Government Securities | 36,576 | 21,532 | 15,044 | — | ||||||||||||
Short-Term Investments | 25,350 | 11,971 | 13,379 | — | ||||||||||||
Total | $ | 271,715 | $ | 33,537 | $ | 234,252 | $ | 3,926 | ||||||||
Other Financial Instruments * | $ | 41 | $ | 41 | $ | — | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 77 | $ | 77 | $ | — | $ | — | ||||||||
* | 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. |
Balance as of | Change in | Transfers In | Balance as of | |||||||||||||||||||||
October 31, | Realized Gain | Unrealized | and/or Out of | October 31, | ||||||||||||||||||||
2008 | (Loss) | Appreciation | Net Sales | Level 3 | 2009 | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Asset & Commercial Mortgage Backed Securities | 6,168 | (3,885 | ) | 2,024 | * | (297 | ) | (1,300 | ) | 2,710 | ||||||||||||||
Corporate Bonds | 2,806 | (1,186 | ) | 1,547 | † | (958 | ) | (993 | ) | 1,216 | ||||||||||||||
Total | $ | 8,974 | $ | (5,071 | ) | $ | 3,571 | $ | (1,255 | ) | $ | (2,293 | ) | $ | 3,926 | |||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $(996). | |
† | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $501. |
12
Assets: | ||||
Investments in securities, at market value (cost $262,918) | $ | 271,715 | ||
Receivables: | ||||
Investment securities sold | 2,891 | |||
Fund shares sold | 792 | |||
Dividends and interest | 2,517 | |||
Variation margin | 37 | |||
Other assets | 71 | |||
Total assets | 278,023 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 22,827 | |||
Fund shares redeemed | 243 | |||
Investment management fees | 23 | |||
Dividends | 49 | |||
Distribution fees | 10 | |||
Variation margin | 65 | |||
Accrued expenses | 46 | |||
Other liabilities | 39 | |||
Total liabilities | 23,302 | |||
Net assets | $ | 254,721 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 290,979 | |||
Accumulated undistributed net investment income | 95 | |||
Accumulated net realized loss on investments and foreign currency transactions | (45,114 | ) | ||
Unrealized appreciation of investments | 8,761 | |||
Net assets | $ | 254,721 | ||
Shares authorized | 300,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 9.54/$9.99 | ||
Shares outstanding | 11,687 | |||
Net assets | $ | 111,456 | ||
Class B: Net asset value per share | $ | 9.53 | ||
Shares outstanding | 1,090 | |||
Net assets | $ | 10,389 | ||
Class C: Net asset value per share | $ | 9.55 | ||
Shares outstanding | 2,432 | |||
Net assets | $ | 23,237 | ||
Class Y: Net asset value per share | $ | 9.52 | ||
Shares outstanding | 11,514 | |||
Net assets | $ | 109,639 | ||
13
Investment Income: | ||||
Interest | $ | 14,619 | ||
Securities lending | 44 | |||
Total investment income | 14,663 | |||
Expenses: | ||||
Investment management fees | 1,249 | |||
Transfer agent fees | 234 | |||
Distribution fees | ||||
Class A | 226 | |||
Class B | 86 | |||
Class C | 175 | |||
Custodian fees | 11 | |||
Accounting services fees | 41 | |||
Registration and filing fees | 60 | |||
Board of Directors’ fees | 8 | |||
Audit fees | 13 | |||
Other expenses | 49 | |||
Total expenses (before waivers and fees paid indirectly) | 2,152 | |||
Expense waivers | (146 | ) | ||
Transfer agent fee waivers | (3 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (149 | ) | ||
Total expenses, net | 2,003 | |||
Net Investment Income | 12,660 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (28,771 | ) | ||
Net realized gain on futures | 1,770 | |||
Net realized loss on swap contracts | (380 | ) | ||
Net realized loss on forward foreign currency contracts | (6 | ) | ||
Net realized gain on other foreign currency transactions | 4 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (27,383 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 59,541 | |||
Net unrealized depreciation of futures | (88 | ) | ||
Net unrealized depreciation of forward foreign currency contracts | (5 | ) | ||
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 | 59,455 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 32,072 | |||
Net Increase in Net Assets Resulting from Operations | $ | 44,732 | ||
14
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 12,660 | $ | 18,842 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (27,383 | ) | (16,896 | ) | ||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 59,455 | (46,211 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 44,732 | (44,265 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (5,026 | ) | (5,406 | ) | ||||
Class B | (417 | ) | (446 | ) | ||||
Class C | (831 | ) | (699 | ) | ||||
Class Y | (6,601 | ) | (11,948 | ) | ||||
Total distributions | (12,875 | ) | (18,499 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 16,535 | 2,065 | ||||||
Class B | 1,344 | (252 | ) | |||||
Class C | 7,581 | 1,637 | ||||||
Class Y | (44,886 | ) | (33,960 | ) | ||||
Net decrease from capital share transactions | (19,426 | ) | (30,510 | ) | ||||
Net Increase (Decrease) In Net Assets | 12,431 | (93,274 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 242,290 | 335,564 | ||||||
End of period | $ | 254,721 | $ | 242,290 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 95 | $ | 172 | ||||
15
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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
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. 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 Valuation Time. 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 using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service may be 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 generally valued at amortized cost, which approximates market value. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s Valuation Time. | |||
Options contracts on securities, currencies, indices, futures contracts, commodities and other instruments shall be valued at their last reported sale 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 sale price at the Valuation Time on another exchange or market where it did trade. If it is not possible to determine the last reported sale price on the Primary Market or another 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. Absent both bid and asked prices on such exchange, the bid price may be used. | |||
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 and asked 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. |
18
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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had no outstanding forward foreign currency contracts as of October 31, 2009. | |||
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. |
19
Notes to Financial Statements — (continued)
October 31, 2009
(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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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. The Fund, as shown on the Schedule of Investments, had when-issued or delayed delivery securities as of October 31, 2009. | ||
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 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 |
20
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) | Credit Default Swaps — The Fund is subject to credit risk in the normal course of pursuing its investment objectives. The Fund may enter into event linked swaps, including credit default swap contracts. The credit default swap market allows the Fund to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults of corporate and sovereign issuers, or to create exposure to corporate or sovereign issuers to which it is not otherwise exposed. Certain credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying security in the event of a credit event, such as payment default or bankruptcy. | ||
Under a credit default swap, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying security at par if the defined credit event occurs. Upon the occurrence of a defined credit event, the difference between the value of the reference obligation and the swap’s notional amount is recorded as realized gain or loss on swap transactions in the Statement of Operations. 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. This risk is mitigated by having a master netting arrangement between the Fund and the counterparty (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities) or by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty. The Fund will generally not buy protection on issuers that are not currently held by the Fund. The Fund had no outstanding credit default swaps as of October 31, 2009. | |||
o) | Interest Rate Swaps — The Fund is subject to interest rate risk exposure in the normal course of pursuing its investment objectives. Because the Fund holds fixed rate bonds, the value of these bonds may decrease if interest rates rise. To help hedge against this risk and to maintain its ability to generate income at prevailing market rates, the Fund may enter into interest rate swap contracts. In a typical interest rate swap, one party agrees to make regular payments equal to a floating interest rate, based on a specified interest rate benchmark (i.e. LIBOR, etc.), 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. The net interest received or paid on interest rate swap agreements is accrued daily as interest income/expense. Interest rate swaps are marked-to-market daily and the change, if any, is recorded as an unrealized gain or loss in the Statement of Operations. When the interest rate swap contract is terminated early, the Fund records a realized gain or loss equal to the difference between the current realized value and the expected cash flows. | ||
If an interest rate swap agreement provides for payments in different currencies, the parties might agree to exchange the notional principal amount as well. Interest rate swaps may also depend on other prices or rates, such as the value of an index or mortgage prepayment rates. The risks of interest rate swaps include changes in market conditions which will affect the value of the contract or the cash flows and the possible inability of the counterparty to fulfill its obligations under the agreement. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the contract’s remaining life, to the extent that amount is positive. This risk may be mitigated by having a master netting arrangement between the Fund and the counterparty or by posting collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty. As of October 31, 2009, the Fund had no outstanding interest rate swaps. | |||
p) | 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. |
21
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
q) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||||||||
Interest rate contracts | Investments in securities, at value | $ | 34 | |||||||||||||
(Purchased Options), Market Value | ||||||||||||||||
Interest rate contracts | Summary of Net Assets - Unrealized appreciation | 41 | Summary of Net Assets - Unrealized depreciation | 77 |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | $ | — | $ | 19 | $ | 1,770 | $ | — | $ | — | $ | 1,789 | ||||||||||||
Foreign exchange contracts | — | — | — | (6 | ) | — | (6 | ) | ||||||||||||||||
Credit contracts | — | — | — | — | (380 | ) | (380 | ) | ||||||||||||||||
Total | $ | — | $ | 19 | $ | 1,770 | $ | (6 | ) | $ | (380 | ) | $ | 1,403 | ||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | — | (7 | ) | (88 | ) | — | — | $ | (95 | ) | ||||||||||||||
Foreign exchange contracts | — | — | — | (5 | ) | — | (5 | ) | ||||||||||||||||
Total | $ | — | $ | (7 | ) | $ | (88 | ) | $ | (5 | ) | $ | — | $ | (100 | ) | ||||||||
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. 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 is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset 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. |
22
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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of October 31, 2009. | |||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. The Fund, as shown on the Schedule of Investments, had outstanding purchased option contracts as of October 31, 2009. There were no transactions involving written option contracts during the year ended October 31, 2009. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 12,921 | $ | 18,595 |
23
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 171 | ||
Accumulated Capital Losses * | (44,922 | ) | ||
Unrealized Appreciation † | 8,568 | |||
Total Accumulated Deficit | $ | (36,183 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase undistributed net investment income by $138, decrease accumulated net realized loss on investments by $137, and decrease paid-in-capital by $1. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2013 | $ | 311 | ||
2014 | 262 | |||
2015 | 161 | |||
2016 | 16,662 | |||
2017 | 27,526 | |||
Total | $ | 44,922 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
5. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
24
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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% |
Class A | Class B | Class C | Class Y | |||
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 year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 0.95 | % | 0.95 | % | 0.95 | % | 0.95 | % | 0.95 | % | ||||||||||
Class B Shares | 1.67 | 1.70 | 1.70 | 1.70 | 1.70 | |||||||||||||||
Class C Shares | 1.70 | 1.70 | 1.70 | 1.70 | 1.70 | |||||||||||||||
Class Y Shares | 0.64 | 0.63 | 0.68 | 0.70 | 0.70 |
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $883 and contingent deferred sales charges of $18 from the Fund. |
25
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $9. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $225 for providing such services. These fees are accrued daily and paid monthly. |
6. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 148,806 | ||
Sales Proceeds Excluding U.S. Government Obligations | 201,370 | |||
Cost of Purchases for U.S. Government Obligations | 236,293 | |||
Sales Proceeds for U.S. Government Obligations | 206,320 |
26
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 5,906 | 525 | (4,596 | ) | — | 1,835 | 5,059 | 410 | (5,290 | ) | — | 179 | ||||||||||||||||||||||||||||
Amount | $ | 51,605 | $ | 4,607 | $ | (39,677 | ) | $ | — | $ | 16,535 | $ | 49,096 | $ | 3,912 | $ | (50,943 | ) | $ | — | $ | 2,065 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 522 | 40 | (412 | ) | — | 150 | 343 | 38 | (412 | ) | — | (31 | ) | |||||||||||||||||||||||||||
Amount | $ | 4,571 | $ | 355 | $ | (3,582 | ) | $ | — | $ | 1,344 | $ | 3,347 | $ | 368 | $ | (3,967 | ) | $ | — | $ | (252 | ) | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,308 | 61 | (505 | ) | — | 864 | 1,001 | 44 | (881 | ) | — | 164 | ||||||||||||||||||||||||||||
Amount | $ | 11,508 | $ | 541 | $ | (4,468 | ) | $ | — | $ | 7,581 | $ | 9,674 | $ | 423 | $ | (8,460 | ) | $ | — | $ | 1,637 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 685 | 752 | (6,849 | ) | — | (5,412 | ) | 2,605 | 1,250 | (8,011 | ) | — | (4,156 | ) | ||||||||||||||||||||||||||
Amount | $ | 6,248 | $ | 6,530 | $ | (57,664 | ) | $ | — | $ | (44,886 | ) | $ | 25,488 | $ | 11,985 | $ | (71,433 | ) | $ | — | $ | (33,960 | ) |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 53 | $ | 462 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
27
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.28 | $ | 0.48 | $ | — | $ | 1.27 | $ | 1.75 | $ | (0.49 | ) | $ | — | $ | — | $ | (0.49 | ) | $ | 1.26 | $ | 9.54 | ||||||||||||||||||||
B | 8.28 | 0.42 | — | 1.26 | 1.68 | (0.43 | ) | — | — | (0.43 | ) | 1.25 | 9.53 | |||||||||||||||||||||||||||||||
C | 8.30 | 0.42 | — | 1.25 | 1.67 | (0.42 | ) | — | — | (0.42 | ) | 1.25 | 9.55 | |||||||||||||||||||||||||||||||
Y | 8.27 | 0.51 | — | 1.25 | 1.76 | (0.51 | ) | — | — | (0.51 | ) | 1.25 | 9.52 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.14 | 0.54 | — | (1.87 | ) | (1.33 | ) | (0.53 | ) | — | — | (0.53 | ) | (1.86 | ) | 8.28 | ||||||||||||||||||||||||||||
B | 10.14 | 0.47 | — | (1.87 | ) | (1.40 | ) | (0.46 | ) | — | — | (0.46 | ) | (1.86 | ) | 8.28 | ||||||||||||||||||||||||||||
C | 10.16 | 0.47 | — | (1.87 | ) | (1.40 | ) | (0.46 | ) | — | — | (0.46 | ) | (1.86 | ) | 8.30 | ||||||||||||||||||||||||||||
Y | 10.12 | 0.57 | — | (1.86 | ) | (1.29 | ) | (0.56 | ) | — | — | (0.56 | ) | (1.85 | ) | 8.27 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.33 | 0.57 | — | (0.19 | ) | 0.38 | (0.57 | ) | — | — | (0.57 | ) | (0.19 | ) | 10.14 | |||||||||||||||||||||||||||||
B | 10.33 | 0.50 | — | (0.20 | ) | 0.30 | (0.49 | ) | — | — | (0.49 | ) | (0.19 | ) | 10.14 | |||||||||||||||||||||||||||||
C | 10.35 | 0.50 | — | (0.19 | ) | 0.31 | (0.50 | ) | — | — | (0.50 | ) | (0.19 | ) | 10.16 | |||||||||||||||||||||||||||||
Y | 10.32 | 0.60 | — | (0.20 | ) | 0.40 | (0.60 | ) | — | — | (0.60 | ) | (0.20 | ) | 10.12 | |||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.24 | 0.54 | — | 0.08 | 0.62 | (0.53 | ) | — | — | (0.53 | ) | 0.09 | 10.33 | |||||||||||||||||||||||||||||||
B | 10.24 | 0.46 | — | 0.08 | 0.54 | (0.45 | ) | — | — | (0.45 | ) | 0.09 | 10.33 | |||||||||||||||||||||||||||||||
C | 10.26 | 0.46 | — | 0.08 | 0.54 | (0.45 | ) | — | — | (0.45 | ) | 0.09 | 10.35 | |||||||||||||||||||||||||||||||
Y | 10.24 | 0.56 | — | 0.08 | 0.64 | (0.56 | ) | — | — | (0.56 | ) | 0.08 | 10.32 | |||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
B | 10.72 | 0.43 | — | (0.43 | ) | — | (0.44 | ) | (0.04 | ) | — | (0.48 | ) | (0.48 | ) | 10.24 | ||||||||||||||||||||||||||||
C | 10.74 | 0.43 | — | (0.43 | ) | — | (0.44 | ) | (0.04 | ) | — | (0.48 | ) | (0.48 | ) | 10.26 | ||||||||||||||||||||||||||||
Y | 10.72 | 0.52 | — | (0.42 | ) | 0.10 | (0.54 | ) | (0.04 | ) | — | (0.58 | ) | (0.48 | ) | 10.24 |
(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. |
28
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Turnover Rate(d) | ||||||||||||||||||||||
21.83 | % | $ | 111,456 | 1.08 | % | 0.95 | % | 0.95 | % | 5.46 | % | 178 | % | |||||||||||||||
20.85 | 10,389 | 1.96 | 1.67 | 1.67 | 4.74 | — | ||||||||||||||||||||||
20.76 | 23,237 | 1.76 | 1.70 | 1.70 | 4.66 | — | ||||||||||||||||||||||
22.07 | 109,639 | 0.64 | 0.64 | 0.64 | 5.88 | — | ||||||||||||||||||||||
(13.71 | ) | 81,569 | 1.02 | 0.95 | 0.95 | 5.53 | 177 | |||||||||||||||||||||
(14.36 | ) | 7,779 | 1.91 | 1.70 | 1.70 | 4.79 | — | |||||||||||||||||||||
(14.34 | ) | 13,007 | 1.76 | 1.70 | 1.70 | 4.79 | — | |||||||||||||||||||||
(13.37 | ) | 139,935 | 0.63 | 0.63 | 0.63 | 5.85 | — | |||||||||||||||||||||
3.77 | 98,047 | 1.08 | 0.95 | 0.95 | 5.72 | 147 | ||||||||||||||||||||||
3.00 | 9,837 | 1.95 | 1.70 | 1.70 | 4.92 | — | ||||||||||||||||||||||
3.01 | 14,263 | 1.82 | 1.70 | 1.70 | 4.92 | — | ||||||||||||||||||||||
3.97 | 213,417 | 0.68 | 0.68 | 0.68 | 5.95 | — | ||||||||||||||||||||||
6.24 | 37,168 | 1.21 | 0.95 | 0.95 | 5.35 | 175 | ||||||||||||||||||||||
5.45 | 7,224 | 2.06 | 1.70 | 1.70 | 4.60 | — | ||||||||||||||||||||||
5.44 | 8,101 | 1.96 | 1.70 | 1.70 | 4.61 | — | ||||||||||||||||||||||
6.41 | 60,690 | 0.78 | 0.70 | 0.70 | 5.63 | — | ||||||||||||||||||||||
0.70 | 28,942 | 1.20 | 0.95 | 0.95 | 4.80 | 188 | ||||||||||||||||||||||
(0.04 | ) | 5,973 | 2.06 | 1.70 | 1.70 | 4.05 | — | |||||||||||||||||||||
(0.03 | ) | 5,142 | 1.96 | 1.70 | 1.70 | 4.05 | — | |||||||||||||||||||||
0.98 | 16,431 | 0.79 | 0.70 | 0.70 | 5.16 | — |
29
The Hartford Mutual Funds, Inc.
December 15, 2009
30
31
Directors and Officers (Unaudited) — (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
32
33
U.S. Treasury* | 5.00 | % | ||
Other Securities | 95.00 | % | ||
Total | 100.00 | % | ||
QII† | 100.00 | % |
* | The income received from federal obligations. | |
† | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.488 | N/A | N/A | 0.488 | ||||||||||||
Class B | 0.426 | N/A | N/A | 0.426 | ||||||||||||
Class C | 0.424 | N/A | N/A | 0.424 | ||||||||||||
Class Y | 0.513 | N/A | N/A | 0.513 |
34
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,137.60 | $ | 5.12 | $ | 1,000.00 | $ | 1,020.42 | $ | 4.84 | 0.95 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,133.80 | $ | 9.04 | $ | 1,000.00 | $ | 1,016.74 | $ | 8.54 | 1.68 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,133.30 | $ | 9.14 | $ | 1,000.00 | $ | 1,016.64 | $ | 8.64 | 1.70 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,139.60 | $ | 3.29 | $ | 1,000.00 | $ | 1,022.13 | $ | 3.11 | 0.61 | 184 | 365 |
35
36
37
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
38
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Inflation Plus Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
22 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 | ||||
29 | ||||
30 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks a total return that exceeds the rate of inflation over an economic cycle. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
Inflation Plus A# | 17.20 | % | 4.66 | % | 5.52 | % | ||||||
Inflation Plus A## | 11.93 | % | 3.70 | % | 4.83 | % | ||||||
Inflation Plus B# | 16.30 | % | 3.86 | % | 4.75 | % | ||||||
Inflation Plus B## | 11.30 | % | 3.52 | % | 4.75 | % | ||||||
Inflation Plus C# | 16.32 | % | 3.85 | % | 4.74 | % | ||||||
Inflation Plus C## | 15.32 | % | 3.85 | % | 4.74 | % | ||||||
Inflation Plus I# | 17.53 | % | 4.87 | % | 5.67 | % | ||||||
Inflation Plus R3# | 16.78 | % | 4.52 | % | 4.98 | % | ||||||
Inflation Plus R4# | 17.14 | % | 4.69 | % | 5.12 | % | ||||||
Inflation Plus R5# | 17.30 | % | 4.84 | % | 5.24 | % | ||||||
Inflation Plus Y# | 17.44 | % | 4.91 | % | 5.31 | % | ||||||
Barclays Capital U.S. TIPS Index | 17.15 | % | 4.83 | % | 6.11 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. | |
(5) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Classes R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance, which commenced operations on 11/28/03. |
Portfolio Managers | ||
John Hendricks | ||
Senior Vice President |
2
as of October 31, 2009
Percentage of | ||||
Long Term | ||||
Rating | Holdings | |||
AAA | 99.9 | % | ||
Not Rated | 0.1 | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
Industry | Net Assets | |||
Long Call Index Option Contract | 0.0 | % | ||
Long Put Future Option Contract | 0.1 | |||
U.S. Government Securities | 90.6 | |||
Short-Term Investments | 9.7 | |||
Other Assets and Liabilities | (0.4 | ) | ||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
U.S. GOVERNMENT SECURITIES - 90.6% | ||||||||
U.S. Treasury Securities - 90.6% | ||||||||
U.S. Treasury Bonds - 21.6% | ||||||||
$ | 44,740 | 1.75%, 01/15/2028 ◄ | $ | 44,372 | ||||
38,975 | 2.00%, 01/15/2026 ◄ | 42,761 | ||||||
194,505 | 2.38%, 01/15/2025 - 01/15/2027 ◄ | 224,702 | ||||||
5,000 | 3.63%, 04/15/2028 ◄ | 8,273 | ||||||
320,108 | ||||||||
U.S. Treasury Notes - 69.0% | ||||||||
30,000 | 0.63%, 04/15/2013 ◄ | 30,902 | ||||||
24,702 | 1.63%, 01/15/2015 ◄ | 28,871 | ||||||
41,000 | 1.88%, 07/15/2019 ◄ | 43,297 | ||||||
73,575 | 1.88%, 07/15/2013 - 07/15/2015 ◄ | 89,644 | ||||||
312,894 | 2.00%, 04/15/2012 - 01/15/2016 ◄ | 364,884 | ||||||
48,950 | 2.13%, 01/15/2019 ◄ | 52,380 | ||||||
25,000 | 2.38%, 10/31/2014 | 25,065 | ||||||
47,852 | 2.38%, 01/15/2017 ◄ | 55,227 | ||||||
169,165 | 2.50%, 07/15/2016 - 01/15/2029 ◄ | 190,550 | ||||||
12,585 | 2.63%, 07/15/2017 ◄ | 14,422 | ||||||
43,785 | 3.00%, 08/31/2016 - 09/30/2016 | 43,933 | ||||||
61,432 | 3.00%, 07/15/2012 ◄ | 79,176 | ||||||
1,715 | 3.38%, 01/15/2012 ◄ | 2,231 | ||||||
1,020,582 | ||||||||
1,340,690 | ||||||||
Total U.S. government securities (cost $1,286,356) | $ | 1,340,690 | ||||||
Contracts | Market Value ╪ | |||||||
CALL OPTIONS PURCHASED - 0.0% | ||||||||
Long Call Index Option Contract - 0.0% | ||||||||
U.S. 5 Year Note Option | ||||||||
1 | Expiration: November, 2009, Exercise Price:$117.00 Θ | $ | 408 | |||||
Total call options purchased (cost $305) | $ | 408 | ||||||
Contracts | Market Value ╪ | |||||||
PUT OPTIONS PURCHASED - 0.1% | ||||||||
Long Put Future Option Contract - 0.1% | ||||||||
U.S. 10 Year Note Option | ||||||||
2 | Expiration: February, 2010, Exercise Price:$110.00 | $ | 759 | |||||
Total put options purchased (cost $1,091) | $ | 759 | ||||||
Total long-term investments (cost $1,287,752) | $ | 1,341,857 | ||||||
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS - 9.7% | ||||||||||||
Investment Pools and Funds - 6.6% | ||||||||||||
$ | 66,829 | JP Morgan U.S. Government Money Market Fund | $ | 66,829 | ||||||||
— | State Street Bank U.S. Government Money Market Fund | — | ||||||||||
31,001 | Wells Fargo Advantage Government Money Market Fund | 31,001 | ||||||||||
97,830 | ||||||||||||
Repurchase Agreements - 3.0% | ||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 11/02/2009 in the amount of $22,899, collateralized by U.S. Treasury Bond 5.25% - 7.88%, 2021 - 2029, value of $23,715) | ||||||||||||
22,899 | 0.06%, 10/30/2009 | 22,898 | ||||||||||
RBS Greenwich Capital Markets TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $11,519, collateralized by U.S. Treasury Bond 5.00%, 2037, U.S. Treasury Note 3.13% - 4.63%, 2013 - 2017, value of $11,749) | ||||||||||||
11,519 | 0.06%, 10/30/2009 | 11,519 | ||||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 11/02/2009 in the amount of $10,550, collateralized by U.S. Treasury Note 1.50%, 2010, value of $10,694) | ||||||||||||
10,550 | 0.04%, 10/30/2009 | 10,550 | ||||||||||
44,967 | ||||||||||||
U.S. Treasury Bills - 0.1% | ||||||||||||
930 | 0.08%, 1/14/2010o ○ | 930 | ||||||||||
Total short-term investments (cost $143,727) | $ | 143,727 | ||||||||||
Total investments (cost $1,431,479)▲ | 100.4 | % | $ | 1,485,584 | ||||||||
Other assets and liabilities | (0.4 | )% | (5,943 | ) | ||||||||
Total net assets | 100.0 | % | $ | 1,479,641 | ||||||||
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $1,447,982 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 54,437 | ||
Unrealized Depreciation | (16,835 | ) | ||
Net Unrealized Appreciation | $ | 37,602 | ||
◄ | 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. |
4
□ | Security pledged as initial margin deposit for open futures contracts at October 31, 2009. | |
Futures Contracts Outstanding at October 31, 2009 |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
U.S. 5 Year Note | 200 | Long | Dec 2009 | $ | 174 | |||||||||||
U.S. 5 Year Note | 200 | Short | Dec 2009 | $ | (160 | ) | ||||||||||
U.S. Long Bond | 33 | Long | Dec 2009 | $ | 29 | |||||||||||
$ | 43 | |||||||||||||||
* | The number of contracts does not omit 000’s. | |
Θ | At October 31, 2009, these securities were designated to cover open call options written as follows: |
Unrealized | ||||||||||||||||
Issuer/ Exercise Price/ | Number of | Market | Premiums | Appreciation | ||||||||||||
Expiration Date | Contracts* | Value ╪ | Received | (Depreciation) | ||||||||||||
U.S. 5 Year Note Option, $118.00, Nov, 2009 | 1,374 | $ | 86 | $ | 60 | $ | (26 | ) | ||||||||
* | The number of contracts does not omit 000’s. |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Australian Dollar (Buy) | $ | 7,237 | $ | 7,285 | 11/03/09 | $ | (48 | ) | ||||||||
Euro (Buy) | 42,558 | 43,008 | 11/13/09 | (450 | ) | |||||||||||
Euro (Sell) | 14,142 | 14,197 | 11/13/09 | 55 | ||||||||||||
Japanese Yen (Buy) | 30,051 | 30,297 | 11/09/09 | (246 | ) | |||||||||||
Japanese Yen (Sell) | 27,708 | 27,461 | 11/09/09 | (247 | ) | |||||||||||
Japanese Yen (Buy) | 12,264 | 12,030 | 11/09/09 | 234 | ||||||||||||
Japanese Yen (Sell) | 14,606 | 14,654 | 11/09/09 | 48 | ||||||||||||
$ | (654 | ) | ||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
5
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Call Options Purchased | $ | 408 | $ | 408 | $ | — | $ | — | ||||||||
Put Options Purchased | 759 | 759 | — | — | ||||||||||||
U.S. Government Securities | 1,340,690 | 148,696 | 1,191,994 | — | ||||||||||||
Short-Term Investments | 143,727 | 97,830 | 45,897 | — | ||||||||||||
Total | $ | 1,485,584 | $ | 247,693 | $ | 1,237,891 | $ | — | ||||||||
Other Financial Instruments * | $ | 540 | $ | 203 | $ | 337 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 1,177 | $ | 186 | $ | 991 | $ | — | ||||||||
* | 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
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $1,431,479) | $ | 1,485,584 | ||
Foreign currency on deposit with custodian (cost $9) | 9 | |||
Unrealized appreciation on forward foreign currency contracts | 337 | |||
Receivables: | ||||
Investment securities sold | 382 | |||
Fund shares sold | 17,476 | |||
Dividends and interest | 7,470 | |||
Variation margin | 150 | |||
Other assets | 253 | |||
Total assets | 1,511,661 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 991 | |||
Payables: | ||||
Investment securities purchased | 25,011 | |||
Fund shares redeemed | 5,006 | |||
Investment management fees | 124 | |||
Dividends | 360 | |||
Distribution fees | 116 | |||
Variation margin | 122 | |||
Accrued expenses | 201 | |||
Written options (proceeds $60) | 86 | |||
Other liabilities | 3 | |||
Total liabilities | 32,020 | |||
Net assets | $ | 1,479,641 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 1,430,586 | |||
Accumulated undistributed net investment income | 2,905 | |||
Accumulated net realized loss on investments and foreign currency transactions | (7,318 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 53,468 | |||
Net assets | $ | 1,479,641 | ||
Shares authorized | 600,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 11.39/$11.93 | ||
Shares outstanding | 53,416 | |||
Net assets | $ | 608,161 | ||
Class B: Net asset value per share | $ | 11.30 | ||
Shares outstanding | 8,492 | |||
Net assets | $ | 95,935 | ||
Class C: Net asset value per share | $ | 11.29 | ||
Shares outstanding | 41,074 | |||
Net assets | $ | 463,764 | ||
Class I: Net asset value per share | $ | 11.45 | ||
Shares outstanding | 12,038 | |||
Net assets | $ | 137,773 | ||
Class R3: Net asset value per share | $ | 11.36 | ||
Shares outstanding | 472 | |||
Net assets | $ | 5,355 | ||
Class R4: Net asset value per share | $ | 11.40 | ||
Shares outstanding | 242 | |||
Net assets | $ | 2,758 | ||
Class R5: Net asset value per share | $ | 11.42 | ||
Shares outstanding | 23 | |||
Net assets | $ | 258 | ||
Class Y: Net asset value per share | $ | 11.43 | ||
Shares outstanding | 14,487 | |||
Net assets | $ | 165,637 | ||
7
(000’s Omitted)
Investment Income: | ||||
Interest | $ | 16,216 | ||
Total investment income | 16,216 | |||
Expenses: | ||||
Investment management fees | 5,564 | |||
Administrative services fees | 5 | |||
Transfer agent fees | 1,150 | |||
Distribution fees | ||||
Class A | 1,115 | |||
Class B | 859 | |||
Class C | 3,271 | |||
Class R3 | 7 | |||
Class R4 | 3 | |||
Custodian fees | 7 | |||
Accounting services fees | 191 | |||
Registration and filing fees | 168 | |||
Board of Directors’ fees | 25 | |||
Audit fees | 40 | |||
Other expenses | 239 | |||
Total expenses (before waivers and fees paid indirectly) | 12,644 | |||
Expense waivers | (1,023 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (1,023 | ) | ||
Total expenses, net | 11,621 | |||
Net Investment Income | 4,595 | |||
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized gain on investments in securities | 9,746 | |||
Net realized gain on futures | 6,388 | |||
Net realized loss on written options | (4,698 | ) | ||
Net realized gain on forward foreign currency contracts | 1,480 | |||
Net realized loss on other foreign currency transactions | (410 | ) | ||
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 12,506 | |||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 143,170 | |||
Net unrealized appreciation of futures | 43 | |||
Net unrealized depreciation of written options | (78 | ) | ||
Net unrealized depreciation of forward foreign currency contracts | (1,398 | ) | ||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 43 | |||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions | 141,780 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 154,286 | |||
Net Increase in Net Assets Resulting from Operations | $ | 158,881 | ||
8
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 4,595 | $ | 40,628 | ||||
Net realized gain on investments, other financial instruments and foreign currency transactions | 12,506 | 2,090 | ||||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 141,780 | (90,885 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 158,881 | (48,167 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (2,454 | ) | (14,746 | ) | ||||
Class B | (368 | ) | (3,680 | ) | ||||
Class C | (1,322 | ) | (10,507 | ) | ||||
Class I | (375 | ) | (791 | ) | ||||
Class R3 | (7 | ) | (6 | ) | ||||
Class R4 | (4 | ) | (1 | ) | ||||
Class R5 | (1 | ) | (1 | ) | ||||
Class Y | (1,001 | ) | (10,227 | ) | ||||
Total distributions | (5,532 | ) | (39,959 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 236,750 | 159,030 | ||||||
Class B | 7,786 | 14,863 | ||||||
Class C | 176,476 | 109,914 | ||||||
Class I | 101,702 | 28,077 | ||||||
Class R3 | 4,939 | 237 | ||||||
Class R4 | 2,575 | 8 | ||||||
Class R5 | 212 | 19 | ||||||
Class Y | 5,207 | (13,282 | ) | |||||
Net increase from capital share transactions | 535,647 | 298,866 | ||||||
Net Increase In Net Assets | 688,996 | 210,740 | ||||||
Net Assets: | ||||||||
Beginning of period | 790,645 | 579,905 | ||||||
End of period | $ | 1,479,641 | $ | 790,645 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 2,905 | $ | 2,715 | ||||
9
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 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 |
10
security’s primary market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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. 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 Valuation Time. 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 using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service may be 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 generally valued at amortized cost, which approximates market value. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s Valuation Time. | |||
Options contracts on securities, currencies, indices, futures contracts, commodities and other instruments shall be valued at their last reported sale 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 sale price at the Valuation Time on another exchange or market where it did trade. If it is not possible to determine the last reported sale price on the Primary Market or another 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. Absent both bid and asked prices on such exchange, the bid price may be used. | |||
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 and asked 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. |
11
October 31, 2009
(000’s Omitted)
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. |
12
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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 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 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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) | 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 October 31, 2009, the Fund had no outstanding when-issued or delayed delivery securities. |
13
October 31, 2009
(000’s Omitted)
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 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. The Fund had no outstanding senior floating rate interests as of October 31, 2009. | ||
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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||||
Interest rate contracts | Written Options, Market Value | 86 | ||||||||||
Interest rate contracts | Summary of Net Assets — Unrealized appreciation | 203 | Summary of Net Assets — Unrealized depreciation | 160 | ||||||||
Interest rate contracts | Investments in securities, at value (Purchased Options), Market Value | 1,167 | ||||||||||
Foreign exchange contracts | Unrealized appreciation on forward foreign currency contracts | 337 | Unrealized depreciation on forward foreign currency contracts | 991 |
14
The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the year ended October 31, 2009. | |||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | $ | (4,698 | ) | $ | 6,110 | $ | 6,388 | $ | — | $ | — | $ | 7,800 | |||||||||||
Foreign exchange contracts | — | — | — | 1,480 | — | 1,480 | ||||||||||||||||||
Total | $ | (4,698 | ) | $ | 6,110 | $ | 6,388 | $ | 1,480 | $ | — | $ | 9,280 | |||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | (78 | ) | (101 | ) | 43 | — | — | $ | (136 | ) | ||||||||||||||
Foreign exchange contracts | — | — | — | (1,398 | ) | — | (1,398 | ) | ||||||||||||||||
Total | $ | (78 | ) | $ | (101 | ) | $ | 43 | $ | (1,398 | ) | $ | — | $ | (1,534 | ) | ||||||||
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. | Futures and Options: |
Futures and Options Transactions — The Fund is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset 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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of October 31, 2009. | |||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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. |
15
October 31, 2009
(000’s Omitted)
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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. The Fund, as shown on the Schedule of Investments, had outstanding purchased option contracts as of October 31, 2009. Transactions involving written option contracts during the year ended October 31, 2009, are summarized below: |
Options Contract Activity During the Year Ended October 31, 2009 | ||||||||
Call Options Written During the Period | Number of Contracts* | Premium Amounts | ||||||
Beginning of the period | 1,000 | $ | 216 | |||||
Written | 32,100 | 23,305 | ||||||
Expired | — | — | ||||||
Closed | (31,726 | ) | (23,461 | ) | ||||
Exercised | — | — | ||||||
End of Period | 1,374 | $ | 60 | |||||
Put Options Written During the Period | Number of Contracts* | Premium Amounts | ||||||
Beginning of the period | — | $ | — | |||||
Written | 28,814 | 22,335 | ||||||
Expired | (1,872 | ) | (111 | ) | ||||
Closed | (26,942 | ) | (22,224 | ) | ||||
Exercised | — | — | ||||||
End of Period | — | $ | — | |||||
* | 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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
16
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 5,319 | $ | 40,029 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 11,813 | ||
Unrealized Appreciation * | 37,602 | |||
Total Accumulated Earnings | $ | 49,415 | ||
* | The differences between book-basis and tax-basis unrealized appreciation (depreciation) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase accumulated undistributed net investment income by $1,127, decrease accumulated net realized loss on investments by $1,070, and decrease paid-in-capital by $57. | ||
e) | Capital Loss Carryforward — The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2009. | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
5. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
17
October 31, 2009
(000’s Omitted)
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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% |
Effective November 1, 2009, HIFSCO has agreed to revise the voluntary limit (which is the permanent expense limitation) on total operating expenses for the Fund, exclusive of taxes, interest, brokerage commissions, certain distribution expenses and extraordinary expenses. The new expense limitation is as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
0.90% | 1.65% | 1.65% | 0.65% | 1.25% | 1.00% | 0.81% | 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 year ended October 31, 2009, this amount is included in the Statement of Operations. |
18
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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 0.85 | % | 0.85 | % | 0.85 | % | 0.95 | % | 0.95 | % | ||||||||||
Class B Shares | 1.60 | 1.60 | 1.60 | 1.70 | 1.70 | |||||||||||||||
Class C Shares | 1.60 | 1.60 | 1.60 | 1.70 | 1.70 | |||||||||||||||
Class I Shares | 0.60 | 0.60 | 0.58 | 0.70 * | ||||||||||||||||
Class R3 Shares | 1.25 | 1.25 | 1.23 | † | ||||||||||||||||
Class R4 Shares | 1.00 | 1.00 | 0.99 | † | ||||||||||||||||
Class R5 Shares | 0.76 | 0.70 | 0.72 | † | ||||||||||||||||
Class Y Shares | 0.59 | 0.60 | 0.56 | 0.68 | 0.68 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006. | |
† | 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $4,996 and contingent deferred sales charges of $435 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $76. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $1,086 for providing such services. These fees are accrued daily and paid monthly. | |||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
6. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 76,226 | ||
Sales Proceeds Excluding U.S. Government Obligations | 101,506 | |||
Cost of Purchases for U.S. Government Obligations | 1,890,232 | |||
Sales Proceeds for U.S. Government Obligations | 1,417,554 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 42,591 | 190 | (20,853 | ) | — | 21,928 | 25,993 | 1,034 | (12,853 | ) | — | 14,174 | ||||||||||||||||||||||||||||
Amount | $ | 458,293 | $ | 2,018 | $ | (223,561 | ) | $ | — | $ | 236,750 | $ | 288,295 | $ | 11,450 | $ | (140,715 | ) | $ | — | $ | 159,030 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,833 | 28 | (2,137 | ) | — | 724 | 2,544 | 258 | (1,479 | ) | — | 1,323 | ||||||||||||||||||||||||||||
Amount | $ | 30,124 | $ | 289 | $ | (22,627 | ) | $ | — | $ | 7,786 | $ | 28,133 | $ | 2,852 | $ | (16,122 | ) | $ | — | $ | 14,863 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 23,968 | 89 | (7,728 | ) | — | 16,329 | 14,894 | 669 | (5,776 | ) | — | 9,787 | ||||||||||||||||||||||||||||
Amount | $ | 257,766 | $ | 933 | $ | (82,223 | ) | $ | — | $ | 176,476 | $ | 165,357 | $ | 7,411 | $ | (62,854 | ) | $ | — | $ | 109,914 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 13,345 | 25 | (4,098 | ) | — | 9,272 | 4,848 | 56 | (2,466 | ) | — | 2,438 | ||||||||||||||||||||||||||||
Amount | $ | 145,997 | $ | 266 | $ | (44,561 | ) | $ | — | $ | 101,702 | $ | 53,494 | $ | 615 | $ | (26,032 | ) | $ | — | $ | 28,077 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 537 | 1 | (88 | ) | — | 450 | 38 | 1 | (18 | ) | — | 21 | ||||||||||||||||||||||||||||
Amount | $ | 5,902 | $ | 7 | $ | (970 | ) | $ | — | $ | 4,939 | $ | 424 | $ | 6 | $ | (193 | ) | $ | — | $ | 237 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 253 | — | (13 | ) | — | 240 | 1 | — | — | — | 1 | |||||||||||||||||||||||||||||
Amount | $ | 2,717 | $ | 4 | $ | (146 | ) | $ | — | $ | 2,575 | $ | 7 | $ | 1 | $ | — | $ | — | $ | 8 | |||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 28 | — | (8 | ) | — | 20 | 2 | — | — | — | 2 | |||||||||||||||||||||||||||||
Amount | $ | 304 | $ | 1 | $ | (93 | ) | $ | — | $ | 212 | $ | 18 | $ | 1 | $ | — | $ | — | $ | 19 | |||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,778 | 95 | (3,497 | ) | — | 376 | 3,285 | 920 | (5,452 | ) | — | (1,247 | ) | |||||||||||||||||||||||||||
Amount | $ | 41,289 | $ | 998 | $ | (37,080 | ) | $ | — | $ | 5,207 | $ | 36,316 | $ | 10,241 | $ | (59,839 | ) | $ | — | $ | (13,282 | ) |
20
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 125 | $ | 1,341 | |||||
For the Year Ended October 31, 2008 | 56 | $ | 621 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Subsequent Events: | |
Reorganization of The Hartford U.S. Government Securities Fund with and into the Fund: | ||
On August 5, 2009, the Board of Directors of the The Hartford Mutual Funds II, Inc. approved on behalf of The Hartford U.S. Government Securities Fund and the Board of Directors of the Company approved on behalf of the Fund, a Form of Agreement and Plan of Reorganization that provides for the reorganization of The Hartford U.S. Government Securities Fund, a series of The Hartford Mutual Funds II, Inc., into the Fund. The reorganization does not require shareholder approval. | ||
Effective September 30, 2009, Classes A, B, C, L and Y of The Hartford U.S. Government Securities 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. | ||
The reorganization is expected to occur on or about the close of business on February 19, 2010 or on such other date as the officers of The Hartford Mutual Funds determine. | ||
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
21
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 9.78 | $ | 0.09 | $ | — | $ | 1.59 | $ | 1.68 | $ | (0.07 | ) | $ | — | $ | — | $ | (0.07 | ) | $ | 1.61 | $ | 11.39 | ||||||||||||||||||||
B | 9.76 | (0.07 | ) | — | 1.66 | 1.59 | (0.05 | ) | — | — | (0.05 | ) | 1.54 | 11.30 | ||||||||||||||||||||||||||||||
C | 9.75 | (0.01 | ) | — | 1.60 | 1.59 | (0.05 | ) | — | — | (0.05 | ) | 1.54 | 11.29 | ||||||||||||||||||||||||||||||
I | 9.81 | 0.19 | — | 1.52 | 1.71 | (0.07 | ) | — | — | (0.07 | ) | 1.64 | 11.45 | |||||||||||||||||||||||||||||||
R3 | 9.78 | 0.26 | — | 1.38 | 1.64 | (0.06 | ) | — | — | (0.06 | ) | 1.58 | 11.36 | |||||||||||||||||||||||||||||||
R4 | 9.79 | 0.30 | — | 1.37 | 1.67 | (0.06 | ) | — | — | (0.06 | ) | 1.61 | 11.40 | |||||||||||||||||||||||||||||||
R5 | 9.80 | 0.30 | — | 1.39 | 1.69 | (0.07 | ) | — | — | (0.07 | ) | 1.62 | 11.42 | |||||||||||||||||||||||||||||||
Y | 9.80 | 0.02 | — | 1.68 | 1.70 | (0.07 | ) | — | — | (0.07 | ) | 1.63 | 11.43 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.66 | 0.60 | — | (0.87 | ) | (0.27 | ) | (0.61 | ) | — | — | (0.61 | ) | (0.88 | ) | 9.78 | ||||||||||||||||||||||||||||
B | 10.64 | 0.53 | — | (0.88 | ) | (0.35 | ) | (0.53 | ) | — | — | (0.53 | ) | (0.88 | ) | 9.76 | ||||||||||||||||||||||||||||
C | 10.63 | 0.52 | — | (0.87 | ) | (0.35 | ) | (0.53 | ) | — | — | (0.53 | ) | (0.88 | ) | 9.75 | ||||||||||||||||||||||||||||
I | 10.68 | 0.62 | — | (0.85 | ) | (0.23 | ) | (0.64 | ) | — | — | (0.64 | ) | (0.87 | ) | 9.81 | ||||||||||||||||||||||||||||
R3 | 10.67 | 0.53 | — | (0.85 | ) | (0.32 | ) | (0.57 | ) | — | — | (0.57 | ) | (0.89 | ) | 9.78 | ||||||||||||||||||||||||||||
R4 | 10.67 | 0.57 | — | (0.86 | ) | (0.29 | ) | (0.59 | ) | — | — | (0.59 | ) | (0.88 | ) | 9.79 | ||||||||||||||||||||||||||||
R5 | 10.68 | 0.58 | — | (0.83 | ) | (0.25 | ) | (0.63 | ) | — | — | (0.63 | ) | (0.88 | ) | 9.80 | ||||||||||||||||||||||||||||
Y | 10.69 | 0.66 | — | (0.91 | ) | (0.25 | ) | (0.64 | ) | — | — | (0.64 | ) | (0.89 | ) | 9.80 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.44 | 0.39 | — | 0.21 | 0.60 | (0.38 | ) | — | — | (0.38 | ) | 0.22 | 10.66 | |||||||||||||||||||||||||||||||
B | 10.45 | 0.29 | — | 0.23 | 0.52 | (0.33 | ) | — | — | (0.33 | ) | 0.19 | 10.64 | |||||||||||||||||||||||||||||||
C | 10.44 | 0.29 | — | 0.23 | 0.52 | (0.33 | ) | — | — | (0.33 | ) | 0.19 | 10.63 | |||||||||||||||||||||||||||||||
I | 10.44 | 0.31 | — | 0.32 | 0.63 | (0.39 | ) | — | — | (0.39 | ) | 0.24 | 10.68 | |||||||||||||||||||||||||||||||
R3(f) | 10.41 | 0.39 | — | 0.22 | 0.61 | (0.35 | ) | — | — | (0.35 | ) | 0.26 | 10.67 | |||||||||||||||||||||||||||||||
R4(f) | 10.41 | 0.41 | — | 0.22 | 0.63 | (0.37 | ) | — | — | (0.37 | ) | 0.26 | 10.67 | |||||||||||||||||||||||||||||||
R5(f) | 10.41 | 0.43 | — | 0.22 | 0.65 | (0.38 | ) | — | — | (0.38 | ) | 0.27 | 10.68 | |||||||||||||||||||||||||||||||
Y | 10.45 | 0.38 | — | 0.26 | 0.64 | (0.40 | ) | — | — | (0.40 | ) | 0.24 | 10.69 | |||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
B | 10.68 | 0.40 | — | (0.25 | ) | 0.15 | (0.35 | ) | (0.03 | ) | — | (0.38 | ) | (0.23 | ) | 10.45 | ||||||||||||||||||||||||||||
C | 10.67 | 0.40 | — | (0.25 | ) | 0.15 | (0.35 | ) | (0.03 | ) | — | (0.38 | ) | (0.23 | ) | 10.44 | ||||||||||||||||||||||||||||
I(i) | 10.48 | 0.05 | — | (0.05 | ) | — | (0.04 | ) | — | — | (0.04 | ) | (0.04 | ) | 10.44 | |||||||||||||||||||||||||||||
Y | 10.68 | 0.51 | — | (0.25 | ) | 0.26 | (0.46 | ) | (0.03 | ) | — | (0.49 | ) | (0.23 | ) | 10.45 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
B | 10.96 | 0.33 | — | (0.18 | ) | 0.15 | (0.34 | ) | (0.09 | ) | — | (0.43 | ) | (0.28 | ) | 10.68 | ||||||||||||||||||||||||||||
C | 10.96 | 0.33 | — | (0.19 | ) | 0.14 | (0.34 | ) | (0.09 | ) | — | (0.43 | ) | (0.29 | ) | 10.67 | ||||||||||||||||||||||||||||
Y | 10.97 | 0.47 | — | (0.22 | ) | 0.25 | (0.45 | ) | (0.09 | ) | — | (0.54 | ) | (0.29 | ) | 10.68 |
(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) | Commenced operations on December 22, 2006. | |
(g) | Not annualized. | |
(h) | Annualized. | |
(i) | Commenced operations on August 31, 2006. |
22
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||
17.20% | $ | 608,161 | 0.96 | % | 0.85 | % | 0.85 | % | 0.89 | % | 145 | % | ||||||||||||
16.30 | 95,935 | 1.75 | 1.60 | 1.60 | (0.64 | ) | — | |||||||||||||||||
16.32 | 463,764 | 1.69 | 1.60 | 1.60 | (0.07 | ) | — | |||||||||||||||||
17.53 | 137,773 | 0.74 | 0.60 | 0.60 | 1.92 | — | ||||||||||||||||||
16.78 | 5,355 | 1.38 | 1.25 | 1.25 | 2.73 | — | ||||||||||||||||||
17.14 | 2,758 | 1.02 | 1.00 | 1.00 | 3.07 | — | ||||||||||||||||||
17.30 | 258 | 0.76 | 0.76 | 0.76 | 2.91 | — | ||||||||||||||||||
17.44 | 165,637 | 0.59 | 0.59 | 0.59 | 0.16 | — | ||||||||||||||||||
(3.08) | 307,863 | 1.01 | 0.91 | 0.85 | 5.60 | 437 | ||||||||||||||||||
(3.81) | 75,789 | 1.80 | 1.66 | 1.60 | 4.82 | — | ||||||||||||||||||
(3.82) | 241,305 | 1.75 | 1.66 | 1.60 | 4.86 | — | ||||||||||||||||||
(2.74) | 27,135 | 0.75 | 0.65 | 0.60 | 5.28 | — | ||||||||||||||||||
(3.56) | 216 | 1.43 | 1.30 | 1.25 | 5.63 | — | ||||||||||||||||||
(3.23) | 17 | 1.12 | 1.06 | 1.00 | 5.29 | — | ||||||||||||||||||
(2.94) | 28 | 0.75 | 0.75 | 0.70 | 4.92 | — | ||||||||||||||||||
(2.90) | 138,292 | 0.65 | 0.65 | 0.60 | 5.85 | — | ||||||||||||||||||
5.86 | 184,558 | 1.22 | 1.03 | 0.85 | 3.09 | 608 | ||||||||||||||||||
5.05 | 68,593 | 2.01 | 1.78 | 1.60 | 2.51 | — | ||||||||||||||||||
5.05 | 159,067 | 1.97 | 1.78 | 1.60 | 2.31 | — | ||||||||||||||||||
6.22 | 3,501 | 0.71 | 0.61 | 0.58 | 2.85 | — | ||||||||||||||||||
5.98 (g) | 10 | 1.59 | (h) | 1.40 | (h) | 1.23 | (h) | 4.36 | (h) | — | ||||||||||||||
6.15 (g) | 10 | 1.28 | (h) | 1.15 | (h) | 0.99 | (h) | 4.61 | (h) | — | ||||||||||||||
6.42 (g) | 11 | 0.99 | (h) | 0.89 | (h) | 0.72 | (h) | 4.86 | (h) | — | ||||||||||||||
6.23 | 164,155 | 0.82 | 0.72 | 0.56 | 3.71 | — | ||||||||||||||||||
2.29 | 282,362 | 1.02 | 0.95 | 0.95 | 4.50 | 193 | ||||||||||||||||||
1.51 | 92,340 | 1.82 | 1.70 | 1.70 | 3.76 | — | ||||||||||||||||||
1.51 | 247,091 | 1.78 | 1.70 | 1.70 | 3.72 | — | ||||||||||||||||||
0.04 (g) | 18 | 0.98 | (h) | 0.70 | (h) | 0.70 | (h) | 4.43 | (h) | — | ||||||||||||||
2.58 | 140,796 | 0.68 | 0.68 | 0.68 | 5.05 | — | ||||||||||||||||||
2.10 | 414,778 | 1.00 | 0.95 | 0.95 | 3.88 | 71 | ||||||||||||||||||
1.33 | 119,302 | 1.81 | 1.70 | 1.70 | 3.09 | — | ||||||||||||||||||
1.24 | 373,750 | 1.76 | 1.70 | 1.70 | 3.12 | — | ||||||||||||||||||
2.29 | 95,947 | 0.68 | 0.68 | 0.68 | 4.42 | — |
23
The Hartford Mutual Funds, Inc.
December 15, 2009
24
25
Directors and Officers (Unaudited) — (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
26
27
U.S. Treasury* | 98.00 | % | ||
Other Securities | 2.00 | % | ||
Total | 100.00 | % | ||
QII† | 85.00 | % | ||
QSTCG† | 100.00 | % |
* | The income received from federal obligations. | |
† | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C) (QII) and as short-term capital gain distributions under Internal Revenue Code Section 871(k)(2)(C) (QSTCG). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.066 | N/A | N/A | 0.066 | ||||||||||||
Class B | 0.047 | N/A | N/A | 0.047 | ||||||||||||
Class C | 0.047 | N/A | N/A | 0.047 | ||||||||||||
Class I | 0.073 | N/A | N/A | 0.073 | ||||||||||||
Class R3 | 0.056 | N/A | N/A | 0.056 | ||||||||||||
Class R4 | 0.062 | N/A | N/A | 0.062 | ||||||||||||
Class R5 | 0.069 | N/A | N/A | 0.069 | ||||||||||||
Class Y | 0.072 | N/A | N/A | 0.072 |
28
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,069.20 | $ | 4.43 | $ | 1,000.00 | $ | 1,020.92 | $ | 4.33 | 0.85 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,064.10 | $ | 8.32 | $ | 1,000.00 | $ | 1,017.14 | $ | 8.13 | 1.60 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,064.20 | $ | 8.32 | $ | 1,000.00 | $ | 1,017.14 | $ | 8.13 | 1.60 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,070.10 | $ | 3.13 | $ | 1,000.00 | $ | 1,022.18 | $ | 3.06 | 0.60 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,067.10 | $ | 6.51 | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1.25 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,068.00 | $ | 5.21 | $ | 1,000.00 | $ | 1,020.16 | $ | 5.09 | 1.00 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,069.10 | $ | 3.96 | $ | 1,000.00 | $ | 1,021.37 | $ | 3.87 | 0.76 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,069.20 | $ | 3.08 | $ | 1,000.00 | $ | 1,022.23 | $ | 3.01 | 0.59 | 184 | 365 |
29
30
31
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
32
33
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford n I ternational Growth Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
12 | ||||
24 | ||||
26 | ||||
27 | ||||
29 | ||||
29 | ||||
30 | ||||
31 | ||||
32 |
(subadvised by Wellington Management Company, LLP) | Investment objective – Seeks capital appreciation. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
International Growth A# | 13.15 | % | -2.35 | % | 0.41 | % | ||||||
International Growth A## | 6.93 | % | -3.45 | % | -0.25 | % | ||||||
International Growth B# | 12.61 | % | -3.03 | % | NA* | |||||||
International Growth B## | 7.61 | % | -3.33 | % | NA* | |||||||
International Growth C# | 12.31 | % | -3.08 | % | -0.32 | % | ||||||
International Growth C## | 11.31 | % | -3.08 | % | -0.32 | % | ||||||
International Growth I# | 13.43 | % | -2.12 | % | 0.55 | % | ||||||
International Growth R3# | 12.53 | % | -2.40 | % | 0.57 | % | ||||||
International Growth R4# | 12.96 | % | -2.20 | % | 0.69 | % | ||||||
International Growth R5# | 13.29 | % | -2.01 | % | 0.80 | % | ||||||
International Growth Y# | 13.52 | % | -1.93 | % | 0.85 | % | ||||||
MSCI EAFE Growth Index | 24.08 | % | 5.40 | % | 3.00 | % |
# | 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, 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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||||||
John A. Boselli, CFA | Jean-Marc Berteaux | Matthew D. Hudson, CFA | Andrew S. Offit, CPA | |||
Director, Partner | Senior Vice President, Partner | Vice President | Senior Vice President, Partner |
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 1.6 | % | ||
Banks (Financials) | 7.4 | |||
Capital Goods (Industrials) | 9.7 | |||
Commercial & Professional Services (Industrials) | 3.4 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 2.2 | |||
Consumer Services (Consumer Discretionary) | 3.4 | |||
Diversified Financials (Financials) | 2.1 | |||
Energy (Energy) | 4.7 | |||
Food & Staples Retailing (Consumer Staples) | 1.0 | |||
Food, Beverage & Tobacco (Consumer Staples) | 7.6 | |||
Health Care Equipment & Services (Health Care) | 2.2 | |||
Household & Personal Products (Consumer Staples) | 3.0 | |||
Insurance (Financials) | 3.1 | |||
Materials (Materials) | 12.2 | |||
Media (Consumer Discretionary) | 3.5 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 8.7 | |||
Real Estate (Financials) | 1.2 | |||
Retailing (Consumer Discretionary) | 1.3 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 1.6 | |||
Software & Services (Information Technology) | 5.0 | |||
Technology Hardware & Equipment (Information Technology) | 1.9 | |||
Telecommunication Services (Services) | 2.0 | |||
Transportation (Industrials) | 6.9 | |||
Utilities (Utilities) | 1.7 | |||
Short-Term Investments | 3.1 | |||
Other Assets and Liabilities | (0.5 | ) | ||
Total | 100.0 | % | ||
3
as of October 31, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 6.0 | % | ||
Austria | 1.6 | |||
Brazil | 2.1 | |||
Canada | 6.3 | |||
China | 3.9 | |||
France | 6.7 | |||
Germany | 5.3 | |||
Hong Kong | 2.9 | |||
India | 0.5 | |||
Indonesia | 0.4 | |||
Ireland | 0.5 | |||
Israel | 3.2 | |||
Italy | 0.8 | |||
Japan | 6.4 | |||
Luxembourg | 2.0 | |||
Netherlands | 2.0 | |||
Singapore | 1.2 | |||
Spain | 2.5 | |||
Sweden | 3.6 | |||
Switzerland | 12.4 | |||
Taiwan | 1.1 | |||
Turkey | 1.4 | |||
United Kingdom | 23.7 | |||
United States | 0.9 | |||
Short-Term Investments | 3.1 | |||
Other Assets and Liabilities | (0.5 | ) | ||
Total | 100.0 | % | ||
4
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 96.8% | ||||||||
Australia - 6.0% | ||||||||
199 | BHP Billiton Ltd. | $ | 6,518 | |||||
315 | Navitas Ltd. | 1,048 | ||||||
584 | Toll Holdings Ltd. | 4,427 | ||||||
11,993 | ||||||||
Austria - 1.6% | ||||||||
32 | Andritz AG | 1,774 | ||||||
42 | Voestalpine AG | 1,436 | ||||||
3,210 | ||||||||
Brazil - 1.5% | ||||||||
89 | Companhia Energetica de Minas Gerais | 1,398 | ||||||
24 | Itau Unibanco Banco Multiplo S.A. ADR | 451 | ||||||
66 | Natura Cosmeticos S.A. | 1,188 | ||||||
3,037 | ||||||||
Canada - 6.3% | ||||||||
67 | Barrick Gold Corp. | 2,418 | ||||||
164 | CAE, Inc. | 1,277 | ||||||
27 | Canadian Natural Resources Ltd. | 1,755 | ||||||
77 | CGI Group, Inc. Class A • | 937 | ||||||
26 | Petrobank Energy and Resources Ltd. • | 1,138 | ||||||
36 | Potash Corp. of Saskatchewan, Inc. | 3,323 | ||||||
43 | SNC-Lavalin Group, Inc. | 1,745 | ||||||
12,593 | ||||||||
China - 3.9% | ||||||||
51 | Ctrip.com International Ltd. ADR • | 2,740 | ||||||
775 | Dongfeng Motor Group Co., Ltd. | 921 | ||||||
33 | Longtop Financial Technologies Ltd. • | 875 | ||||||
8 | Shanda Interactive Entertainment Ltd. ADR • | 343 | ||||||
529 | Shandong Weigao Group Medical Polymer Co., Ltd. | 1,870 | ||||||
1,102 | Zhejiang Expressway Co., Ltd. | 937 | ||||||
7,686 | ||||||||
France - 6.7% | ||||||||
17 | Bureau Veritas S.A. | 929 | ||||||
23 | Cie Generale d’Optique Essilor International S.A. | 1,275 | ||||||
149 | Club Mediterranee • | 3,016 | ||||||
16 | Faiveley S.A. | 1,327 | ||||||
87 | Publicis Groupe | 3,288 | ||||||
13 | Schneider Electric S.A. | 1,399 | ||||||
12 | Vallourec | 1,945 | ||||||
13,179 | ||||||||
Germany - 5.3% | ||||||||
26 | BASF SE | 1,400 | ||||||
19 | Beiersdorf AG | 1,159 | ||||||
45 | Daimler AG | 2,199 | ||||||
35 | HeidelbergCement AG | 2,107 | ||||||
16 | Metro AG | 910 | ||||||
42 | SGL Group • | 1,577 | ||||||
9 | SMA Solar Technology AG | 889 | ||||||
10,241 | ||||||||
Hong Kong - 2.9% | ||||||||
633 | Anta Sports Products Ltd. | 763 | ||||||
777 | China High Speed Transmission | 1,559 | ||||||
980 | Huabao International Holdings Ltd. | 935 | ||||||
432 | Link Reit | 972 | ||||||
87 | Sun Hung Kai Properties Ltd. | 1,317 | ||||||
5,546 | ||||||||
India - 0.5% | ||||||||
9 | HDFC Bank Ltd. ADR | 951 | ||||||
Indonesia - 0.4% | ||||||||
1,902 | Bank Central Asia PT | 896 | ||||||
Ireland - 0.5% | ||||||||
117 | Experian plc | 1,067 | ||||||
Israel - 3.2% | ||||||||
64 | Check Point Software Technologies Ltd. ADR • | 1,997 | ||||||
88 | Teva Pharmaceutical Industries Ltd. ADR | 4,428 | ||||||
6,425 | ||||||||
Italy - 0.8% | ||||||||
1,437 | Telecom Italia S.p.A. | 1,581 | ||||||
Japan - 6.4% | ||||||||
25 | Astellas Pharma, Inc. | 902 | ||||||
27 | Canon, Inc. | 1,000 | ||||||
115 | Daiichi Sankyo Co., Ltd. | 2,245 | ||||||
52 | Eisai Co., Ltd. | 1,838 | ||||||
518 | Hino Motors Ltd. | 1,913 | ||||||
44 | Makita Corp. | 1,471 | ||||||
— | Osaka Securities Exchange Co., Ltd. | 86 | ||||||
24 | Point, Inc. | 1,405 | ||||||
16 | Sankyo Co., Ltd. | 928 | ||||||
23 | Takeda Pharmaceutical Co., Ltd. | 924 | ||||||
4 | Yamato Kogyo Co. | 132 | ||||||
12,844 | ||||||||
Luxembourg - 2.0% | ||||||||
27 | Oriflame Cosmetics S.A. ADR | 1,504 | ||||||
122 | SES Global S.A. | 2,639 | ||||||
4,143 | ||||||||
Netherlands - 2.0% | ||||||||
148 | TNT N.V. | 3,932 | ||||||
Singapore - 1.2% | ||||||||
434 | Oversea-Chinese Banking Corp., Ltd. | 2,338 | ||||||
Spain - 2.5% | ||||||||
95 | Banco Santander Central Hispano S.A. | 1,523 | ||||||
40 | Red Electrica Corporacion S.A. | 2,075 | ||||||
53 | Telefonica S.A. | 1,476 | ||||||
5,074 | ||||||||
Sweden - 3.6% | ||||||||
70 | Assa Abloy Ab | 1,221 | ||||||
22 | Hennes & Mauritz Ab | 1,242 | ||||||
386 | Lundin Petroleum Ab • | 3,269 | ||||||
156 | Telefonaktiebolaget LM Ericsson ADR | 1,618 | ||||||
7,350 | ||||||||
Switzerland - 12.4% | ||||||||
92 | ABB Ltd. | 1,706 | ||||||
49 | Credit Suisse Group AG | 2,619 | ||||||
43 | Julius Baer Group Ltd. | 1,619 | ||||||
47 | Kuehne & Nagel International AG | 4,288 | ||||||
83 | Nestle S.A. | 3,869 | ||||||
19 | Roche Holding AG | 2,973 | ||||||
14 | Schindler Holding-Part Certificates | 982 | ||||||
1 | SGS S.A. | 934 |
5
Schedule of Investments – (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 96.8% — (continued) | ||||||||||||
Switzerland - 12.4% — (continued) | ||||||||||||
13 | Sonova Holding AG | $ | 1,326 | |||||||||
126 | Temenos Group AG • | 2,880 | ||||||||||
6 | Zurich Financial Services AG | 1,445 | ||||||||||
24,641 | ||||||||||||
Taiwan - 1.1% | ||||||||||||
402 | Delta Electronics, Inc. | 1,116 | ||||||||||
74 | MediaTek, Inc. | 1,039 | ||||||||||
2,155 | ||||||||||||
Turkey - 1.4% | ||||||||||||
160 | Akbank T.A.S | 866 | ||||||||||
29 | Bim Birlesik Magazalar AS | 1,042 | ||||||||||
161 | Turkcell Iletisim Hizmetleri A.S. | 1,063 | ||||||||||
2,971 | ||||||||||||
United Kingdom - 23.7% | ||||||||||||
164 | Admiral Group plc | 2,757 | ||||||||||
141 | Antofagasta | 1,780 | ||||||||||
900 | Arm Holdings plc | 2,185 | ||||||||||
44 | AstraZeneca plc | 1,973 | ||||||||||
119 | Babcock International Group plc | 1,183 | ||||||||||
87 | BG Group plc | 1,490 | ||||||||||
159 | British American Tobacco plc | 5,072 | ||||||||||
146 | Burberry Group plc | 1,289 | ||||||||||
118 | Capita Group plc | 1,479 | ||||||||||
97 | GlaxoSmithKline plc | 1,980 | ||||||||||
123 | HSBC Holding plc | 1,358 | ||||||||||
91 | Imperial Tobacco Group plc | 2,673 | ||||||||||
55 | Intertek Group plc | 1,129 | ||||||||||
229 | Lancashire Holdings Ltd. | 1,891 | ||||||||||
72 | Pearson plc | 981 | ||||||||||
117 | Petrofac Ltd. | 1,799 | ||||||||||
45 | Reckitt Benckiser Group plc | 2,219 | ||||||||||
41 | Rio Tinto plc | 1,825 | ||||||||||
302 | Sage Group plc | 1,056 | ||||||||||
212 | Standard Chartered plc | 5,195 | ||||||||||
115 | Unilever plc | 3,427 | ||||||||||
175 | Xstrata plc | 2,522 | ||||||||||
47,263 | ||||||||||||
United States - 0.9% | ||||||||||||
25 | Netease.com, Inc. • | 946 | ||||||||||
25 | Open Text Corp. • | 913 | ||||||||||
1,859 | ||||||||||||
Total common stocks (cost $181,709) | $ | 192,975 | ||||||||||
PREFERRED STOCKS - 0.6% | ||||||||||||
Brazil - 0.6% | ||||||||||||
67 | Banco Itau Holding | $ | 1,268 | |||||||||
Total preferred stocks (cost $961) | $ | 1,268 | ||||||||||
Total long-term investments (cost $182,670) | $ | 194,243 | ||||||||||
SHORT-TERM INVESTMENTS - 3.1% | ||||||||||||
Repurchase Agreements - 3.1% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $250, collateralized by GNMA 5.00%, 2039, value of $255) | ||||||||||||
$ | 250 | 0.08%, 10/30/2009 | $ | 250 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,462, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $1,491) | ||||||||||||
1,462 | 0.08%, 10/30/2009 | 1,462 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,629, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $1,661) | ||||||||||||
1,629 | 0.08%, 10/30/2009 | 1,629 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $17, collateralized by U.S. Treasury Note 2.75%, 2013, value of $17) | ||||||||||||
16 | 0.05%, 10/30/2009 | 16 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $2,822, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $2,879) | ||||||||||||
2,822 | 0.07%, 10/30/2009 | 2,822 | ||||||||||
6,179 | ||||||||||||
Total short-term investments (cost $6,179) | $ | 6,179 | ||||||||||
Total investments (cost $188,849) ▲ | 100.5 | % | $ | 200,422 | ||||||||
Other assets and liabilities | (0.5 | )% | (1,053 | ) | ||||||||
Total net assets | 100.0 | % | $ | 199,369 | ||||||||
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 96.5% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $192,975 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 14,924 | ||
Unrealized Depreciation | (7,477 | ) | ||
Net Unrealized Appreciation | $ | 7,447 | ||
6
• | Currently non-income producing. |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Australian Dollar (Buy) | $ | 310 | $ | 315 | 11/05/09 | $ | (5 | ) | ||||||||
British Pound (Sell) | 546 | 546 | 11/02/09 | — | ||||||||||||
British Pound (Sell) | 266 | 268 | 11/03/09 | 2 | ||||||||||||
Euro (Buy) | 1,032 | 1,036 | 11/02/09 | (4 | ) | |||||||||||
Japanese Yen (Sell) | 32 | 32 | 11/02/09 | — | ||||||||||||
Japanese Yen (Sell) | 54 | 54 | 11/04/09 | — | ||||||||||||
Japanese Yen (Buy) | 34 | 34 | 11/05/09 | — | ||||||||||||
$ | (7 | ) | ||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Percentage of | ||||
Description | Net Assets | |||
Australian Dollar | 6.0 | % | ||
Brazilian Real | 1.9 | |||
British Pound | 24.2 | |||
Canadian Dollar | 3.5 | |||
Euro | 20.2 | |||
Hong Kong Dollar | 4.8 | |||
Indonesian New Rupiah | 0.4 | |||
Japanese Yen | 6.4 | |||
Singapore Dollar | 1.2 | |||
Swedish Krona | 3.5 | |||
Swiss Franc | 12.4 | |||
Taiwanese Dollar | 1.1 | |||
Turkish New Lira | 1.4 | |||
United States Dollar | 13.5 | |||
Other Assets and Liabilities | (0.5 | ) | ||
Total | 100.0 | % | ||
7
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Automobiles & Components | $ | 3,120 | $ | — | $ | 3,120 | $ | — | ||||||||
Banks | 13,578 | 1,402 | 12,176 | — | ||||||||||||
Capital Goods | 19,314 | 3,022 | 16,292 | — | ||||||||||||
Commercial & Professional Services | 6,721 | — | 6,721 | — | ||||||||||||
Consumer Durables & Apparel | 4,451 | — | 4,451 | — | ||||||||||||
Consumer Services | 6,804 | 2,740 | 4,064 | — | ||||||||||||
Diversified Financials | 4,324 | 1,619 | 2,705 | — | ||||||||||||
Energy | 9,451 | 2,893 | 6,558 | — | ||||||||||||
Food & Staples Retailing | 1,952 | — | 1,952 | — | ||||||||||||
Food, Beverage & Tobacco | 15,041 | — | 15,041 | — | ||||||||||||
Health Care Equipment & Services | 4,471 | — | 4,471 | — | ||||||||||||
Household & Personal Products | 6,070 | 1,188 | 4,882 | — | ||||||||||||
Insurance | 6,093 | — | 6,093 | — | ||||||||||||
Materials | 24,396 | 5,741 | 18,655 | — | ||||||||||||
Media | 6,908 | — | 6,908 | — | ||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences | 17,263 | 4,428 | 12,835 | — | ||||||||||||
Real Estate | 2,289 | — | 2,289 | — | ||||||||||||
Retailing | 2,647 | — | 2,647 | — | ||||||||||||
Semiconductors & Semiconductor Equipment | 3,224 | — | 3,224 | — | ||||||||||||
Software & Services | 9,947 | 6,011 | 3,936 | — | ||||||||||||
Technology Hardware & Equipment | 3,734 | 1,618 | 2,116 | — | ||||||||||||
Telecommunication Services | 4,120 | — | 4,120 | — | ||||||||||||
Transportation | 13,584 | — | 13,584 | — | ||||||||||||
Utilities | 3,473 | 1,398 | 2,075 | — | ||||||||||||
Total | 192,975 | 32,060 | 160,915 | — | ||||||||||||
Preferred Stocks ‡ | 1,268 | 1,268 | — | — | ||||||||||||
Short-Term Investments | 6,179 | — | 6,179 | — | ||||||||||||
Total | $ | 200,422 | $ | 33,328 | $ | 167,094 | $ | — | ||||||||
Other Financial Instruments * | $ | 2 | $ | — | $ | 2 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 9 | $ | — | $ | 9 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $188,849) | $ | 200,422 | ||
Cash | — | |||
Foreign currency on deposit with custodian (cost $9) | 9 | |||
Unrealized appreciation on forward foreign currency contracts | 2 | |||
Receivables: | ||||
Investment securities sold | 951 | |||
Fund shares sold | 140 | |||
Dividends and interest | 358 | |||
Other assets | 102 | |||
Total assets | 201,984 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 9 | |||
Payables: | ||||
Investment securities purchased | 1,781 | |||
Fund shares redeemed | 557 | |||
Investment management fees | 31 | |||
Distribution fees | 13 | |||
Accrued expenses | 224 | |||
Total liabilities | 2,615 | |||
Net assets | $ | 199,369 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 493,177 | |||
Accumulated undistributed net investment income | 3,487 | |||
Accumulated net realized loss on investments and foreign currency transactions | (308,881 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 11,586 | |||
Net assets | $ | 199,369 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.00/$8.47 | ||
Shares outstanding | 17,698 | |||
Net assets | $ | 141,506 | ||
Class B: Net asset value per share | $ | 7.50 | ||
Shares outstanding | 2,342 | |||
Net assets | $ | 17,558 | ||
Class C: Net asset value per share | $ | 7.48 | ||
Shares outstanding | 2,689 | |||
Net assets | $ | 20,105 | ||
Class I: Net asset value per share | $ | 7.95 | ||
Shares outstanding | 1,653 | |||
Net assets | $ | 13,136 | ||
Class R3: Net asset value per share | $ | 8.08 | ||
Shares outstanding | 49 | |||
Net assets | $ | 395 | ||
Class R4: Net asset value per share | $ | 8.14 | ||
Shares outstanding | 37 | |||
Net assets | $ | 305 | ||
Class R5: Net asset value per share | $ | 8.21 | ||
Shares outstanding | 1 | |||
Net assets | $ | 7 | ||
Class Y: Net asset value per share | $ | 8.24 | ||
Shares outstanding | 772 | |||
Net assets | $ | 6,357 | ||
9
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 8,088 | ||
Interest | 16 | |||
Securities lending | 13 | |||
Less: Foreign tax withheld | (963 | ) | ||
Total investment income | 7,154 | |||
Expenses: | ||||
Investment management fees | 2,446 | |||
Administrative services fees | 1 | |||
Transfer agent fees | 1,505 | |||
Distribution fees | ||||
Class A | 386 | |||
Class B | 167 | |||
Class C | 197 | |||
Class R3 | 1 | |||
Class R4 | 1 | |||
Custodian fees | 68 | |||
Accounting services fees | 49 | |||
Registration and filing fees | 105 | |||
Board of Directors’ fees | 10 | |||
Audit fees | 18 | |||
Other expenses | 185 | |||
Total expenses (before waivers and fees paid indirectly) | 5,139 | |||
Expense waivers | (755 | ) | ||
Transfer agent fee waivers | (726 | ) | ||
Commission recapture | (48 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (1,529 | ) | ||
Total expenses, net | 3,610 | |||
Net Investment Income | 3,544 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (51,735 | ) | ||
Net realized loss on forward foreign currency contracts | (1,574 | ) | ||
Net realized gain on other foreign currency transactions | 1,544 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (51,765 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 74,221 | |||
Net unrealized appreciation of forward foreign currency contracts | 184 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (258 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 74,147 | |||
Net Gain on Investments and Foreign Currency Transactions | 22,382 | |||
Net Increase in Net Assets Resulting from Operations | $ | 25,926 | ||
10
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 3,544 | $ | 1,647 | ||||
Net realized loss on investments and foreign currency transactions | (51,765 | ) | (257,465 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 74,147 | (180,270 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 25,926 | (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 | (58,136 | ) | 60,051 | |||||
Class B | (3,461 | ) | 2,861 | |||||
Class C | (6,175 | ) | 4,415 | |||||
Class I | (82,255 | ) | 141,027 | |||||
Class R3 | 74 | 472 | ||||||
Class R4 | 131 | 254 | ||||||
Class R5 | 1 | 2 | ||||||
Class Y | (42,949 | ) | 45,691 | |||||
Net increase (decrease) from capital share transactions | (192,770 | ) | 254,773 | |||||
Net Decrease In Net Assets | (167,349 | ) | (262,047 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 366,718 | 628,765 | ||||||
End of period | $ | 199,369 | $ | 366,718 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 3,487 | $ | 512 | ||||
11
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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. |
13
October 31, 2009
(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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions - Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 |
14
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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts - The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 may use 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 October 31, 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 of the Fund are declared and paid annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, |
15
October 31, 2009
(000’s Omitted)
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 October 31, 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 October 31, 2009, the Fund had no outstanding when-issued or delayed delivery securities. | ||
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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||||||||
Foreign exchange contracts | Unrealized appreciation on forward foreign currency contracts | $ | 2 | Unrealized depreciation on forward foreign currency contracts | $ | 9 |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | (1,574 | ) | $ | — | $ | (1,574 | ) | ||||||||||
Total | $ | — | $ | — | $ | — | $ | (1,574 | ) | $ | — | $ | (1,574 | ) | ||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | 184 | — | $ | 184 | |||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | 184 | $ | — | $ | 184 | ||||||||||||
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 RIC under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income |
16
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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) - Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings - 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 505 | $ | 46,092 | ||||
Long-Term Capital Gains * | — | 34,640 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 3,482 | ||
Accumulated Capital Losses * | (304,755 | ) | ||
Unrealized Appreciation † | 7,465 | |||
Total Accumulated Deficit | $ | (293,808 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts - The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $64 and increase accumulated net realized gain on investments by $64. |
17
October 31, 2009
(000’s Omitted)
e) | Capital Loss Carryforward - At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 194,181 | ||
2017 | 110,574 | |||
Total | $ | 304,755 | ||
f) | Accounting for Uncertainty in Income Taxes - Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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 | % |
18
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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.37 | % | 1.47 | % | 1.48 | % | 1.56 | % | 1.53 | % | ||||||||||
Class B Shares | 1.80 | 2.24 | 2.32 | 2.26 | 2.28 | |||||||||||||||
Class C Shares | 2.15 | 2.20 | 2.19 | 2.31 | 2.28 | |||||||||||||||
Class I Shares | 0.93 | 1.02 | 1.09 | 1.35 | * | |||||||||||||||
Class R3 Shares | 1.83 | 1.85 | 1.83 | † | ||||||||||||||||
Class R4 Shares | 1.50 | 1.46 | 1.45 | † | ||||||||||||||||
Class R5 Shares | 1.23 | 1.08 | 1.16 | † | ||||||||||||||||
Class Y Shares | 1.03 | 0.98 | 1.01 | 1.12 | 1.13 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006. | |
† | 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $529 and contingent deferred sales charges of $46 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $20. These commissions are in turn paid to sales representatives of the broker/dealers. |
19
October 31, 2009
(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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $822 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. 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 | Total Return Excluding | |||||||
from Affiliate for SEC | Payment from Affiliate | |||||||
Settlement for the Year | for the Year Ended | |||||||
Ended October 31, 2007 | 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 October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R5 | 1 |
6. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 1,040,192 | ||
Sales Proceeds Excluding U.S. Government Obligations | 1,227,731 |
20
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 4,066 | — | (12,092 | ) | — | (8,026 | ) | 7,582 | 3,405 | (8,039 | ) | — | 2,948 | |||||||||||||||||||||||||||
Amount | $ | 26,887 | $ | — | $ | (85,023 | ) | $ | — | $ | (58,136 | ) | $ | 101,116 | $ | 53,556 | $ | (94,621 | ) | $ | — | $ | 60,051 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 284 | — | (829 | ) | — | (545 | ) | 472 | 432 | (869 | ) | — | 35 | |||||||||||||||||||||||||||
Amount | $ | 1,744 | $ | — | $ | (5,205 | ) | $ | — | $ | (3,461 | ) | $ | 6,061 | $ | 6,447 | $ | (9,647 | ) | $ | — | $ | 2,861 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 428 | — | (1,442 | ) | — | (1,014 | ) | 795 | 539 | (1,277 | ) | — | 57 | |||||||||||||||||||||||||||
Amount | $ | 2,686 | $ | — | $ | (8,861 | ) | $ | — | $ | (6,175 | ) | $ | 10,626 | $ | 8,047 | $ | (14,258 | ) | $ | — | $ | 4,415 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 4,558 | 71 | (15,238 | ) | — | (10,609 | ) | 13,176 | 22 | (1,124 | ) | — | 12,074 | |||||||||||||||||||||||||||
Amount | $ | 29,459 | $ | 458 | $ | (112,172 | ) | $ | — | $ | (82,255 | ) | $ | 150,705 | $ | 344 | $ | (10,022 | ) | $ | — | $ | 141,027 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 47 | — | (39 | ) | — | 8 | 45 | — | (5 | ) | — | 40 | ||||||||||||||||||||||||||||
Amount | $ | 344 | $ | — | $ | (270 | ) | $ | — | $ | 74 | $ | 526 | $ | 2 | $ | (56 | ) | $ | — | $ | 472 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 35 | — | (17 | ) | — | 18 | 19 | — | (1 | ) | — | 18 | ||||||||||||||||||||||||||||
Amount | $ | 233 | $ | 1 | $ | (103 | ) | $ | — | $ | 131 | $ | 261 | $ | 2 | $ | (9 | ) | $ | — | $ | 254 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | 2 | $ | — | $ | — | $ | 2 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 588 | 7 | (7,258 | ) | — | (6,663 | ) | 3,697 | 588 | (794 | ) | — | 3,491 | |||||||||||||||||||||||||||
Amount | $ | 3,905 | $ | 47 | $ | (46,901 | ) | $ | — | $ | (42,949 | ) | $ | 46,346 | $ | 9,496 | $ | (10,151 | ) | $ | — | $ | 45,691 |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 89 | $ | 606 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. |
21
October 31, 2009
(000’s Omitted)
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
22
23
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.07 | $ | 0.08 | $ | — | $ | 0.85 | $ | 0.93 | $ | — | $ | — | $ | — | $ | — | $ | 0.93 | $ | 8.00 | ||||||||||||||||||||||
B | 6.65 | 0.05 | — | 0.80 | 0.85 | — | — | — | — | 0.85 | 7.50 | |||||||||||||||||||||||||||||||||
C | 6.66 | 0.02 | — | 0.80 | 0.82 | — | — | — | — | 0.82 | 7.48 | |||||||||||||||||||||||||||||||||
I | 7.04 | 0.13 | — | 0.82 | 0.95 | (0.04 | ) | — | — | (0.04 | ) | 0.91 | 7.95 | |||||||||||||||||||||||||||||||
R3 | 7.18 | 0.04 | — | 0.86 | 0.90 | — | — | — | — | 0.90 | 8.08 | |||||||||||||||||||||||||||||||||
R4 | 7.23 | 0.07 | — | 0.86 | 0.93 | (0.02 | ) | — | — | (0.02 | ) | 0.91 | 8.14 | |||||||||||||||||||||||||||||||
R5 | 7.28 | 0.09 | — | 0.87 | 0.96 | (0.03 | ) | — | — | (0.03 | ) | 0.93 | 8.21 | |||||||||||||||||||||||||||||||
Y | 7.30 | 0.10 | — | 0.88 | 0.98 | (0.04 | ) | — | — | (0.04 | ) | 0.94 | 8.24 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | 18.93 | 0.05 | — | (9.50 | ) | (9.45 | ) | — | (2.41 | ) | — | (2.41 | ) | (11.86 | ) | 7.07 | ||||||||||||||||||||||||||||
B | 18.08 | (0.05 | ) | — | (8.97 | ) | (9.02 | ) | — | (2.41 | ) | — | (2.41 | ) | (11.43 | ) | 6.65 | |||||||||||||||||||||||||||
C | 18.10 | (0.05 | ) | — | (8.98 | ) | (9.03 | ) | — | (2.41 | ) | — | (2.41 | ) | (11.44 | ) | 6.66 | |||||||||||||||||||||||||||
I | 18.79 | 0.01 | — | (9.35 | ) | (9.34 | ) | — | (2.41 | ) | — | (2.41 | ) | (11.75 | ) | 7.04 | ||||||||||||||||||||||||||||
R3 | 19.24 | 0.01 | — | (9.66 | ) | (9.65 | ) | — | (2.41 | ) | — | (2.41 | ) | (12.06 | ) | 7.18 | ||||||||||||||||||||||||||||
R4 | 19.30 | 0.02 | — | (9.68 | ) | (9.66 | ) | — | (2.41 | ) | — | (2.41 | ) | (12.07 | ) | 7.23 | ||||||||||||||||||||||||||||
R5 | 19.35 | 0.10 | — | (9.76 | ) | (9.66 | ) | — | (2.41 | ) | — | (2.41 | ) | (12.07 | ) | 7.28 | ||||||||||||||||||||||||||||
Y | 19.38 | 0.12 | — | (9.79 | ) | (9.67 | ) | — | (2.41 | ) | — | (2.41 | ) | (12.08 | ) | 7.30 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | 14.93 | 0.02 | — | 5.35 | 5.37 | (0.01 | ) | (1.36 | ) | — | (1.37 | ) | 4.00 | 18.93 | ||||||||||||||||||||||||||||||
B | 14.42 | (0.11 | ) | — | 5.13 | 5.02 | — | (1.36 | ) | — | (1.36 | ) | 3.66 | 18.08 | ||||||||||||||||||||||||||||||
C | 14.42 | (0.09 | ) | — | 5.13 | 5.04 | — | (1.36 | ) | — | (1.36 | ) | 3.68 | 18.10 | ||||||||||||||||||||||||||||||
I | 14.94 | (0.01 | ) | — | 5.40 | 5.39 | (0.18 | ) | (1.36 | ) | — | (1.54 | ) | 3.85 | 18.79 | |||||||||||||||||||||||||||||
R3(g) | 14.79 | (0.02 | ) | — | 4.47 | 4.45 | — | — | — | — | 4.45 | 19.24 | ||||||||||||||||||||||||||||||||
R4(g) | 14.79 | 0.03 | — | 4.48 | 4.51 | — | — | — | — | 4.51 | 19.30 | |||||||||||||||||||||||||||||||||
R5(g) | 14.79 | 0.07 | — | 4.49 | 4.56 | — | — | — | — | 4.56 | 19.35 | |||||||||||||||||||||||||||||||||
Y | 15.17 | 0.02 | — | 5.55 | 5.57 | — | (1.36 | ) | — | (1.36 | ) | 4.21 | 19.38 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | 12.14 | 0.02 | — | 2.96 | 2.98 | (0.05 | ) | (0.14 | ) | — | (0.19 | ) | 2.79 | 14.93 | ||||||||||||||||||||||||||||||
B | 11.77 | (0.08 | ) | — | 2.87 | 2.79 | — | (0.14 | ) | — | (0.14 | ) | 2.65 | 14.42 | ||||||||||||||||||||||||||||||
C | 11.77 | (0.09 | ) | — | 2.88 | 2.79 | — | (0.14 | ) | — | (0.14 | ) | 2.65 | 14.42 | ||||||||||||||||||||||||||||||
I(j) | 14.34 | (0.02 | ) | — | 0.62 | 0.60 | — | — | — | — | 0.60 | 14.94 | ||||||||||||||||||||||||||||||||
Y | 12.33 | 0.06 | — | 3.02 | 3.08 | (0.10 | ) | (0.14 | ) | — | (0.24 | ) | 2.84 | 15.17 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 11.59 | 0.07 | — | 0.48 | 0.55 | — | — | — | — | 0.55 | 12.14 | |||||||||||||||||||||||||||||||||
B | 11.32 | (0.01 | ) | — | 0.46 | 0.45 | — | — | — | — | 0.45 | 11.77 | ||||||||||||||||||||||||||||||||
C | 11.32 | (0.01 | ) | — | 0.46 | 0.45 | — | — | — | — | 0.45 | 11.77 | ||||||||||||||||||||||||||||||||
Y | 11.72 | 0.08 | — | 0.53 | 0.61 | — | — | — | — | 0.61 | 12.33 |
(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) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Not annualized. | |
(i) | Annualized. | |
(j) | Commenced operations on August 31, 2006. |
24
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||
13.15 | % | $ | 141,506 | 1.83% | 1.39 | % | 1.39 | % | 1.20 | % | 392 | % | ||||||||||||
12.78 | 17,558 | 2.89 | 1.82 | 1.82 | 0.74 | — | ||||||||||||||||||
12.31 | 20,105 | 2.54 | 2.17 | 2.17 | 0.38 | — | ||||||||||||||||||
13.59 | 13,136 | 1.75 | 0.95 | 0.95 | 1.95 | — | ||||||||||||||||||
12.53 | 395 | 2.06 | 1.85 | 1.85 | 0.57 | — | ||||||||||||||||||
12.96 | 305 | 1.51 | 1.40 | 1.40 | 1.00 | — | ||||||||||||||||||
13.29 | 7 | 1.44 | 1.25 | 1.25 | 1.31 | — | ||||||||||||||||||
13.52 | 6,357 | 1.05 | 0.96 | 0.96 | 1.35 | — | ||||||||||||||||||
(56.94 | ) | 181,826 | 1.48 | 1.48 | 1.48 | 0.36 | 359 | |||||||||||||||||
(57.28 | ) | 19,208 | 2.39 | 2.25 | 2.25 | (0.40 | ) | — | ||||||||||||||||
(57.27 | ) | 24,658 | 2.21 | 2.21 | 2.21 | (0.37 | ) | — | ||||||||||||||||
(56.75 | ) | 86,331 | 1.03 | 1.03 | 1.03 | 0.13 | — | |||||||||||||||||
(57.08 | ) | 293 | 1.89 | 1.85 | 1.85 | 0.09 | — | |||||||||||||||||
(56.94 | ) | 139 | 1.47 | 1.47 | 1.47 | 0.15 | — | |||||||||||||||||
(56.77 | ) | 6 | 1.08 | 1.08 | 1.08 | 0.76 | — | |||||||||||||||||
(56.72 | ) | 54,257 | 0.99 | 0.99 | 0.99 | 0.92 | — | |||||||||||||||||
39.31 | (f) | 431,193 | 1.49 | 1.49 | 1.49 | 0.14 | 242 | |||||||||||||||||
38.11 | (f) | 51,577 | 2.36 | 2.33 | 2.33 | (0.73 | ) | — | ||||||||||||||||
38.27 | (f) | 65,982 | 2.20 | 2.20 | 2.20 | (0.61 | ) | — | ||||||||||||||||
39.73 | (f) | 3,543 | 1.12 | 1.12 | 1.12 | (0.06 | ) | — | ||||||||||||||||
30.09 | (h) | 15 | 1.83 (i) | 1.83 | (i) | 1.83 | (i) | (0.15 | ) (i) | — | ||||||||||||||
30.49 | (h) | 13 | 1.46 (i) | 1.46 | (i) | 1.46 | (i) | 0.25 | (i) | — | ||||||||||||||
30.83 | (h) | 13 | 1.17 (i) | 1.17 | (i) | 1.17 | (i) | 0.51 | (i) | — | ||||||||||||||
40.01 | (f) | 76,429 | 1.03 | 1.03 | 1.03 | 0.17 | — | |||||||||||||||||
24.85 | 213,186 | 1.70 | 1.60 | 1.60 | 0.12 | 165 | ||||||||||||||||||
23.95 | 33,252 | 2.56 | 2.30 | 2.30 | (0.59 | ) | — | |||||||||||||||||
23.95 | 43,336 | 2.40 | 2.35 | 2.35 | (0.65 | ) | — | |||||||||||||||||
4.18 | (h) | 10 | 1.53 (i) | 1.35 | (i) | 1.35 | (i) | (0.49 | ) (i) | — | ||||||||||||||
25.38 | 70,777 | 1.16 | 1.16 | 1.16 | 0.42 | — | ||||||||||||||||||
4.74 | 131,430 | 1.77 | 1.60 | 1.60 | 0.66 | 183 | ||||||||||||||||||
3.98 | 22,304 | 2.66 | 2.35 | 2.35 | (0.09 | ) | — | |||||||||||||||||
3.98 | 29,486 | 2.49 | 2.35 | 2.35 | (0.07 | ) | — | |||||||||||||||||
5.20 | 74,651 | 1.22 | 1.20 | 1.20 | 0.98 | — |
25
The Hartford Mutual Funds, Inc.
December 15, 2009
26
27
Directors and Officers (Unaudited) — (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 - 2009). |
28
29
QDI* | 100.00 | % |
* | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class I | 0.038 | N/A | N/A | 0.038 | ||||||||||||
Class R4 | 0.022 | N/A | N/A | 0.022 | ||||||||||||
Class R5 | 0.030 | N/A | N/A | 0.030 | ||||||||||||
Class Y | 0.038 | N/A | N/A | 0.038 |
30
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,240.30 | $ | 7.96 | $ | 1,000.00 | $ | 1,018.10 | $ | 7.17 | 1.41 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,237.60 | $ | 10.66 | $ | 1,000.00 | $ | 1,015.68 | $ | 9.60 | 1.89 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,236.40 | $ | 12.40 | $ | 1,000.00 | $ | 1,014.12 | $ | 11.17 | 2.20 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,242.20 | $ | 5.88 | $ | 1,000.00 | $ | 1,019.96 | $ | 5.30 | 1.04 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,237.40 | $ | 10.72 | $ | 1,000.00 | $ | 1,015.63 | $ | 9.65 | 1.90 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,239.00 | $ | 8.52 | $ | 1,000.00 | $ | 1,017.59 | $ | 7.68 | 1.51 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,242.10 | $ | 7.01 | $ | 1,000.00 | $ | 1,018.95 | $ | 6.31 | 1.24 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,242.80 | $ | 6.05 | $ | 1,000.00 | $ | 1,019.81 | $ | 5.45 | 1.07 | 184 | 365 |
31
32
33
34
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
22 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 | ||||
29 | ||||
30 |
(subadvised by Wellington Management Company, LLP) | Investment objective — Seeks long-term growth of capital. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | 10 | ||||||||||
Year | Year | Year | ||||||||||
International Opportunities A# | 26.36 | % | 7.07 | % | 2.47 | % | ||||||
International Opportunities A## | 19.41 | % | 5.87 | % | 1.89 | % | ||||||
International Opportunities B# | 25.85 | % | 6.41 | % | NA | * | ||||||
International Opportunities B## | 20.85 | % | 6.09 | % | NA | * | ||||||
International Opportunities C# | 25.38 | % | 6.26 | % | 1.69 | % | ||||||
International Opportunities C## | 24.38 | % | 6.26 | % | 1.69 | % | ||||||
International Opportunities I# | 26.81 | % | 7.19 | % | 2.53 | % | ||||||
International Opportunities R3# | 25.94 | % | 7.11 | % | 2.73 | % | ||||||
International Opportunities R4# | 26.42 | % | 7.37 | % | 2.85 | % | ||||||
International Opportunities R5# | 26.67 | % | 7.50 | % | 2.91 | % | ||||||
International Opportunities Y# | 26.94 | % | 7.62 | % | 2.97 | % | ||||||
MSCI All Country World ex U.S. Index | 34.79 | % | 7.58 | % | 3.95 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Class I shares commenced operations on 5/30/08. Performance prior to 5/30/08 reflects Class A performance. Classes R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Nicolas M. Choumenkovitch
Senior Vice President, Partner
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 3.6 | % | ||
Banks (Financials) | 16.4 | |||
Capital Goods (Industrials) | 5.6 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 2.4 | |||
Consumer Services (Consumer Discretionary) | 1.9 | |||
Diversified Financials (Financials) | 6.5 | |||
Energy (Energy) | 9.1 | |||
Food, Beverage & Tobacco (Consumer Staples) | 5.8 | |||
Health Care Equipment & Services (Health Care) | 0.9 | |||
Insurance (Financials) | 2.7 | |||
Materials (Materials) | 12.4 | |||
Media (Consumer Discretionary) | 3.1 | |||
Other Investment Pools and Funds (Financials) | 3.0 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 5.8 | |||
Real Estate (Financials) | 3.2 | |||
Retailing (Consumer Discretionary) | 1.0 | |||
Software & Services (Information Technology) | 1.1 | |||
Technology Hardware & Equipment (Information Technology) | 3.7 | |||
Telecommunication Services (Services) | 4.3 | |||
Transportation (Industrials) | 3.1 | |||
Utilities (Utilities) | 2.0 | |||
Short-Term Investments | 2.4 | |||
Other Assets and Liabilities | — | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
Country | Net Assets | |||
Belgium | 1.4 | % | ||
Brazil | 2.9 | |||
Canada | 4.2 | |||
China | 5.6 | |||
Denmark | 0.9 | |||
France | 4.9 | |||
Germany | 7.0 | |||
Greece | 0.7 | |||
Hong Kong | 5.8 | |||
India | 0.9 | |||
Indonesia | 0.6 | |||
Ireland | 1.9 | |||
Israel | 2.0 | |||
Japan | 9.7 | |||
Malaysia | 0.1 | |||
Mexico | 1.1 | |||
Netherlands | 2.6 | |||
South Africa | 1.8 | |||
Spain | 3.3 | |||
Switzerland | 10.8 | |||
Taiwan | 1.1 | |||
Turkey | 0.8 | |||
United Kingdom | 24.0 | |||
United States | 3.5 | |||
Short-Term Investments | 2.4 | |||
Other Assets and Liabilities | — | |||
Total | 100.0 | % | ||
3
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 94.5% | ||||||||
Belgium — 1.4% | ||||||||
1,289 | Fortis | $ | 5,572 | |||||
Brazil — 2.9% | ||||||||
258 | Banco Bradesco S.A. ADR | 5,075 | ||||||
114 | Cyrela Brazil Realty S.A. | 1,440 | ||||||
198 | Gerdau S.A. | 2,977 | ||||||
87 | Itau Unibanco Banco Multiplo S.A. ADR | 1,658 | ||||||
11,150 | ||||||||
Canada — 4.2% | ||||||||
72 | Potash Corp. of Saskatchewan, Inc. ADR | 6,705 | ||||||
51 | Research In Motion Ltd. ● | 3,001 | ||||||
207 | Suncor Energy, Inc. | 6,855 | ||||||
16,561 | ||||||||
China — 5.6% | ||||||||
2 | Baidu, Inc. ADR ● | 756 | ||||||
2,846 | China Construction Bank | 2,454 | ||||||
1,073 | China Life Insurance Co., Ltd. | 4,934 | ||||||
30 | Ctrip.com International Ltd. ADR ● | 1,596 | ||||||
5,302 | Industrial and Commercial Bank of China | 4,218 | ||||||
10 | Perfect World Co., Ltd. ADR ● | 427 | ||||||
61 | PetroChina Co., Ltd. ADR | 7,286 | ||||||
21,671 | ||||||||
Denmark — 0.9% | ||||||||
218 | DSV A/S | 3,393 | ||||||
France — 4.9% | ||||||||
76 | BNP Paribas | 5,690 | ||||||
113 | Groupe Danone | 6,770 | ||||||
95 | Renault S.A. | 4,247 | ||||||
22 | Schneider Electric S.A. | 2,327 | ||||||
19,034 | ||||||||
Germany — 7.0% | ||||||||
160 | Daimler AG | 7,754 | ||||||
131 | Deutsche Post AG | 2,223 | ||||||
62 | HeidelbergCement AG | 3,685 | ||||||
55 | Man AG | 4,548 | ||||||
61 | SAP AG | 2,762 | ||||||
63 | Siemens AG | 5,699 | ||||||
26,671 | ||||||||
Greece — 0.7% | ||||||||
76 | National Bank of Greece | 2,783 | ||||||
Hong Kong — 5.8% | ||||||||
1,490 | Cathay Pacific Airways Ltd. | 2,414 | ||||||
612 | Esprit Holdings Ltd. | 4,071 | ||||||
983 | Hang Lung Properties Ltd. | 3,715 | ||||||
2,094 | Shangri-La Asia Ltd. | 4,028 | ||||||
589 | Sun Hung Kai Properties Ltd. | 8,924 | ||||||
23,152 | ||||||||
India — 0.9% | ||||||||
12 | HDFC Bank Ltd. ADR | 1,327 | ||||||
58 | Reliance Industries Ltd. | 2,352 | ||||||
3,679 | ||||||||
Indonesia — 0.6% | ||||||||
9,735 | Bumi Resources TBK PT | 2,344 | ||||||
Ireland — 1.9% | ||||||||
261 | CRH plc | 6,393 | ||||||
144 | Ryanair Holdings plc ● | 626 | ||||||
18 | Ryanair Holdings plc ADR ● | 487 | ||||||
7,506 | ||||||||
Israel — 2.0% | ||||||||
153 | Teva Pharmaceutical Industries Ltd. ADR | 7,703 | ||||||
Japan — 9.7% | ||||||||
80 | Eisai Co., Ltd. | 2,823 | ||||||
535 | Fujitsu Ltd. | 3,150 | ||||||
559 | Hino Motors Ltd. | 2,066 | ||||||
1 | KDDI Corp. | 3,349 | ||||||
396 | Konica Minolta Holdings, Inc. | 3,720 | ||||||
328 | Mitsubishi Electric Corp. | 2,495 | ||||||
1,099 | Mitsubishi UFJ Financial Group, Inc. | 5,855 | ||||||
155 | Nikon Corp. | 2,885 | ||||||
489 | Nomura Holdings, Inc. | 3,449 | ||||||
12 | Osaka Titanium Technologies | 313 | ||||||
128 | Panasonic Corp. | 1,804 | ||||||
107 | Softbank Corp. | 2,519 | ||||||
105 | Sumitomo Mitsui Financial Group, Inc. | 3,562 | ||||||
26 | Toho Titanium Co., Ltd. | 326 | ||||||
38,316 | ||||||||
Malaysia — 0.1% | ||||||||
1,442 | Air Asia BHD ● | 567 | ||||||
Mexico — 1.1% | ||||||||
100 | America Movil S.A. de C.V. ADR | 4,431 | ||||||
Netherlands — 2.6% | ||||||||
267 | ING Groep N.V. | 3,476 | ||||||
357 | Koninklijke (Royal) KPN N.V. | 6,483 | ||||||
9,959 | ||||||||
South Africa — 1.8% | ||||||||
31 | Anglo American Platinum Co., Ltd. | 2,650 | ||||||
206 | Impala Platinum Holdings Ltd. | 4,530 | ||||||
7,180 | ||||||||
Spain — 3.3% | ||||||||
307 | Banco Santander Central Hispano S.A. | 4,933 | ||||||
200 | Enagas | 4,104 | ||||||
69 | Red Electrica Corporacion S.A. | 3,550 | ||||||
12,587 | ||||||||
Switzerland — 10.8% | ||||||||
132 | CIE Financiere Richemont S.A. | 3,699 | ||||||
125 | Julius Baer Group Ltd. | 4,695 | ||||||
27 | Kuehne & Nagel International AG | 2,455 | ||||||
166 | Nestle S.A. | 7,700 | ||||||
45 | Roche Holding AG | 7,163 | ||||||
29 | Synthes, Inc. | 3,409 | ||||||
813 | UBS AG | 13,548 | ||||||
42,669 | ||||||||
Taiwan — 1.1% | ||||||||
824 | Hon Hai Precision Industry Co., Ltd. | 3,227 | ||||||
836 | WPG Holdings Co., Ltd. | 1,144 | ||||||
4,371 | ||||||||
Turkey — 0.8% | ||||||||
886 | Turkiye Garanti Bankasi A.S. | 3,217 | ||||||
4
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 94.5% — (continued) | ||||||||||||
United Kingdom — 24.0% | ||||||||||||
112 | AstraZeneca plc | $ | 5,027 | |||||||||
447 | BAE Systems plc | 2,299 | ||||||||||
462 | Barclays Bank plc | 2,420 | ||||||||||
481 | BG Group plc | 8,278 | ||||||||||
804 | BP plc | 7,537 | ||||||||||
1,184 | GKN plc | 2,075 | ||||||||||
1,169 | HSBC Holding plc | 12,921 | ||||||||||
285 | Imperial Tobacco Group plc | 8,387 | ||||||||||
2,353 | Lloyds Banking Group plc | 3,318 | ||||||||||
402 | Pearson plc | 5,464 | ||||||||||
804 | Rexam plc | 3,641 | ||||||||||
245 | Rio Tinto plc | 10,850 | ||||||||||
198 | Standard Chartered plc | 4,848 | ||||||||||
579 | Thomas Cook Group plc | 1,938 | ||||||||||
115 | Wolseley plc | 2,326 | ||||||||||
749 | WPP plc | 6,711 | ||||||||||
465 | Xstrata plc | 6,703 | ||||||||||
94,743 | ||||||||||||
United States — 0.4% | ||||||||||||
43 | Frontline Ltd. | 1,002 | ||||||||||
13 | Netease.com, Inc. ● | 486 | ||||||||||
1,488 | ||||||||||||
Total common stocks (cost $331,505) | $ | 370,747 | ||||||||||
EXCHANGE TRADED FUNDS - 3.1% | ||||||||||||
United States - 3.1% | ||||||||||||
102 | iShares MSCI EAFE Index Fund | $ | 5,442 | |||||||||
36 | iShares MSCI Emerging Markets Index Fund | 1,337 | ||||||||||
75 | iShares MSCI Japan | 719 | ||||||||||
11 | iShares MSCI Pac Ex | 431 | ||||||||||
111 | iShares S&P Eur 350 | 4,162 | ||||||||||
Total exchange traded funds (cost $10,280) | $ | 12,091 | ||||||||||
Total long-term investments (cost $341,785) | $ | 382,838 | ||||||||||
SHORT-TERM INVESTMENTS - 2.4% | ||||||||||||
Repurchase Agreements - 2.4% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $388, collateralized by GNMA 5.00%, 2039, value of $396) | ||||||||||||
$ | 388 | 0.08%, 10/30/2009 | $ | 388 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $2,274, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $2,320) | ||||||||||||
2,274 | 0.08%, 10/30/2009 | 2,274 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $2,533, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $2,584) | ||||||||||||
2,533 | 0.08%, 10/30/2009 | 2,533 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $26, collateralized by U.S. Treasury Note 2.75%, 2013, value of $26) | ||||||||||||
26 | 0.05%, 10/30/2009 | 26 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $4,390, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $4,477) | ||||||||||||
4,390 | 0.07%, 10/30/2009 | 4,390 | ||||||||||
9,611 | ||||||||||||
Total short-term investments (cost $9,611) | $ | 9,611 | ||||||||||
Total investments (cost $351,396) ▲ | 100.0 | % | $ | 392,449 | ||||||||
Other assets and liabilities | — | % | 30 | |||||||||
Total net assets | 100.0 | % | $ | 392,479 | ||||||||
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 94.1% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $361,442 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 48,052 | ||
Unrealized Depreciation | (17,045 | ) | ||
Net Unrealized Appreciation | $ | 31,007 | ||
• | Currently non-income producing. |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
British Pound (Buy) | $ | 405 | $ | 405 | 11/02/09 | $ | — | |||||||||
British Pound (Sell) | 1,189 | 1,200 | 11/03/09 | 11 | ||||||||||||
Euro (Sell) | 1,000 | 1,006 | 11/02/09 | 6 | ||||||||||||
Euro (Buy) | 1,702 | 1,701 | 11/04/09 | 1 | ||||||||||||
Euro (Buy) | 84 | 85 | 11/03/09 | (1 | ) | |||||||||||
Swiss Franc (Buy) | 203 | 203 | 11/02/09 | — | ||||||||||||
Swiss Franc (Sell) | 606 | 611 | 11/03/09 | 5 | ||||||||||||
Turkish New Lira (Buy) | 399 | 398 | 11/02/09 | 1 | ||||||||||||
Turkish New Lira (Buy) | 203 | 204 | 11/03/09 | (1 | ) | |||||||||||
$ | 22 | |||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Percentage of | ||||
Description | Net Assets | |||
Brazilian Real | 1.2 | % | ||
British Pound | 24.0 | |||
Canadian Dollar | 3.4 | |||
Danish Kroner | 0.9 | |||
Euro | 21.7 | |||
Hong Kong Dollar | 8.8 | |||
Indian Rupee | 0.6 | |||
Indonesian New Rupiah | 0.6 | |||
Japanese Yen | 9.7 | |||
Malaysian Ringgit | 0.1 | |||
South African Rand | 1.8 | |||
Swiss Franc | 10.8 | |||
Taiwanese Dollar | 1.1 | |||
Turkish New Lira | 0.8 | |||
United States Dollar | 14.5 | |||
Other Assets and Liabilities | — | |||
Total | 100.0 | % | ||
6
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Automobiles & Components | $ | 14,076 | $ | — | $ | 14,076 | $ | — | ||||||||
Banks | 64,279 | 8,060 | 56,219 | — | ||||||||||||
Capital Goods | 21,760 | — | 21,760 | — | ||||||||||||
Consumer Durables & Apparel | 9,828 | 1,440 | 8,388 | — | ||||||||||||
Consumer Services | 7,562 | 1,596 | 5,966 | — | ||||||||||||
Diversified Financials | 25,168 | 4,695 | 20,473 | — | ||||||||||||
Energy | 35,654 | 15,143 | 20,511 | — | ||||||||||||
Food, Beverage & Tobacco | 22,857 | — | 22,857 | — | ||||||||||||
Health Care Equipment & Services | 3,409 | — | 3,409 | — | ||||||||||||
Insurance | 10,506 | — | 10,506 | — | ||||||||||||
Materials | 48,773 | 9,682 | 39,091 | — | ||||||||||||
Media | 12,175 | — | 12,175 | — | ||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences | 22,716 | 7,703 | 15,013 | — | ||||||||||||
Real Estate | 12,639 | — | 12,639 | — | ||||||||||||
Retailing | 4,071 | — | 4,071 | — | ||||||||||||
Software & Services | 4,431 | 1,669 | 2,762 | — | ||||||||||||
Technology Hardware & Equipment | 14,242 | 3,001 | 11,241 | — | ||||||||||||
Telecommunication Services | 16,782 | 4,431 | 12,351 | — | ||||||||||||
Transportation | 12,165 | 487 | 11,678 | — | ||||||||||||
Utilities | 7,654 | — | 7,654 | — | ||||||||||||
Total | 370,747 | 57,907 | 312,840 | — | ||||||||||||
Exchange Traded Funds | 12,091 | 12,091 | — | — | ||||||||||||
Short-Term Investments | 9,611 | — | 9,611 | — | ||||||||||||
Total | $ | 392,449 | $ | 69,998 | $ | 322,451 | $ | — | ||||||||
Other Financial Instruments * | $ | 24 | $ | — | $ | 24 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 2 | $ | — | $ | 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. |
7
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $351,396) | $ | 392,449 | ||
Cash | 1 | |||
Foreign currency on deposit with custodian (cost $16) | 16 | |||
Unrealized appreciation on forward foreign currency contracts | 24 | |||
Receivables: | ||||
Investment securities sold | 8,899 | |||
Fund shares sold | 1,196 | |||
Dividends and interest | 709 | |||
Other assets | 131 | |||
Total assets | 403,425 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 2 | |||
Payables: | ||||
Investment securities purchased | 10,080 | |||
Fund shares redeemed | 669 | |||
Investment management fees | 56 | |||
Distribution fees | 17 | |||
Accrued expenses | 122 | |||
Total liabilities | 10,946 | |||
Net assets | $ | 392,479 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 461,207 | |||
Accumulated undistributed net investment income | 2,496 | |||
Accumulated net realized loss on investments and foreign currency transactions | (112,299 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 41,075 | |||
Net assets | $ | 392,479 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 12.62/$13.35 | ||
Shares outstanding | 16,456 | |||
Net assets | $ | 207,600 | ||
Class B: Net asset value per share | $ | 11.65 | ||
Shares outstanding | 1,493 | |||
Net assets | $ | 17,390 | ||
Class C: Net asset value per share | $ | 11.46 | ||
Shares outstanding | 2,518 | |||
Net assets | $ | 28,852 | ||
Class I: Net asset value per share | $ | 12.59 | ||
Shares outstanding | 177 | |||
Net assets | $ | 2,230 | ||
Class R3: Net asset value per share | $ | 12.88 | ||
Shares outstanding | 36 | |||
Net assets | $ | 466 | ||
Class R4: Net asset value per share | $ | 12.98 | ||
Shares outstanding | 136 | |||
Net assets | $ | 1,769 | ||
Class R5: Net asset value per share | $ | 13.04 | ||
Shares outstanding | 16 | |||
Net assets | $ | 210 | ||
Class Y: Net asset value per share | $ | 13.07 | ||
Shares outstanding | 10,252 | |||
Net assets | $ | 133,962 | ||
8
Investment Income: | ||||
Dividends | $ | 8,683 | ||
Interest | 20 | |||
Securities lending | 49 | |||
Less: Foreign tax withheld | (913 | ) | ||
Total investment income | 7,839 | |||
Expenses: | ||||
Investment management fees | 2,513 | |||
Administrative services fees | 3 | |||
Transfer agent fees | 890 | |||
Distribution fees | ||||
Class A | 378 | |||
Class B | 156 | |||
Class C | 238 | |||
Class R3 | 1 | |||
Class R4 | 3 | |||
Custodian fees | 44 | |||
Accounting services fees | 53 | |||
Registration and filing fees | 102 | |||
Board of Directors’ fees | 9 | |||
Audit fees | 15 | |||
Other expenses | 105 | |||
Total expenses (before waivers and fees paid indirectly) | 4,510 | |||
Expense waivers | (200 | ) | ||
Transfer agent fee waivers | (318 | ) | ||
Commission recapture | (12 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (530 | ) | ||
Total expenses, net | 3,980 | |||
Net Investment Income | 3,859 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (60,339 | ) | ||
Net realized loss on forward foreign currency contracts | (437 | ) | ||
Net realized gain on other foreign currency transactions | 281 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (60,495 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 131,242 | |||
Net unrealized depreciation of forward foreign currency contracts | (44 | ) | ||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 11 | |||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 131,209 | |||
Net Gain on Investments and Foreign Currency Transactions | 70,714 | |||
Net Increase in Net Assets Resulting from Operations | $ | 74,573 | ||
9
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 3,859 | $ | 5,223 | ||||
Net realized loss on investments and foreign currency transactions | (60,495 | ) | (50,877 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 131,209 | (172,731 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 74,573 | (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 | 25,960 | 69,602 | ||||||
Class B | (2,813 | ) | 987 | |||||
Class C | (3 | ) | 16,805 | |||||
Class I | 1,984 | 207 | ||||||
Class R3 | 317 | 89 | ||||||
Class R4 | 456 | 975 | ||||||
Class R5 | 191 | 7 | ||||||
Class Y | 33,751 | 23,783 | ||||||
Net increase from capital share transactions | 59,843 | 112,455 | ||||||
Net Increase (Decrease) In Net Assets | 127,736 | (172,485 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 264,743 | 437,228 | ||||||
End of period | $ | 392,479 | $ | 264,743 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 2,496 | $ | 5,485 | ||||
10
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
11
Notes to Financial Statements – (continued)
October 31, 2009
(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. 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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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. |
12
• | 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 |
13
Notes to Financial Statements — (continued)
October 31, 2009
(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 October 31, 2009. |
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 may use 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 October 31, 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 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. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an investment in |
14
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 October 31, 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 October 31, 2009, the Fund had no outstanding when-issued or delayed delivery securities. | ||
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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||||||
Foreign exchange contracts | Unrealized appreciation on forward foreign currency contracts | $ | 24 | Unrealized depreciation on forward foreign currency contracts | $ | 2 |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | (437 | ) | $ | — | $ | (437 | ) | ||||||||||
Total | $ | — | $ | — | $ | — | $ | (437 | ) | $ | — | $ | (437 | ) | ||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | (44 | ) | — | $ | (44 | ) | |||||||||||||||
Total | $ | — | $ | — | $ | — | $ | (44 | ) | $ | — | $ | (44 | ) | ||||||||||
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. |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 6,680 | $ | 37,332 | ||||
Long-Term Capital Gains * | — | 29,223 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 2,497 | ||
Accumulated Capital Losses * | (102,253 | ) | ||
Unrealized Appreciation † | 31,028 | |||
Total Accumulated Deficit | $ | (68,728 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $168, increase accumulated net realized gain on investments by $679, and decrease paid-in-capital by $511. |
16
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 42,414 | ||
2017 | 59,839 | |||
Total | $ | 102,253 | ||
As a result of current or past mergers in the Fund, certain provisions in the Internal Revenue Code may limit the future utilization of capital losses. As of October 31, 2009, the Fund had $730 in expired capital loss carryforwards. | |||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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% |
17
Notes to Financial Statements — (continued)
October 31, 2009
(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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.42 | % | 1.47 | % | 1.49 | % | 1.54 | % | 1.52 | % | ||||||||||
Class B Shares | 1.84 | 2.11 | 2.18 | 2.12 | 2.30 | |||||||||||||||
Class C Shares | 2.23 | 2.20 | 2.21 | 2.30 | 2.30 | |||||||||||||||
Class I Shares | 1.22 | 1.00 | * | |||||||||||||||||
Class R3 Shares | 1.81 | 1.79 | 1.71 | † | ||||||||||||||||
Class R4 Shares | 1.37 | 1.51 | 1.40 | † | ||||||||||||||||
Class R5 Shares | 1.08 | 1.10 | 1.11 | † | ||||||||||||||||
Class Y Shares | 0.96 | 0.94 | 0.95 | 0.99 | 1.01 |
* | From May 30, 2008 (commencement of operations), through October 31, 2008. | |
† | 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $521 and contingent deferred sales charges of $45 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $33. These commissions are in turn paid to sales representatives of the broker/dealers. |
18
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $600 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. 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. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 539,838 | ||
Sales Proceeds Excluding U.S. Government Obligations | 477,262 |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
6. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 6,388 | 330 | (5,043 | ) | — | 1,675 | 6,013 | 1,986 | (4,290 | ) | — | 3,709 | ||||||||||||||||||||||||||||
Amount | $ | 74,024 | $ | 3,193 | $ | (51,257 | ) | $ | — | $ | 25,960 | $ | 95,937 | $ | 35,697 | $ | (62,032 | ) | $ | — | $ | 69,602 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 274 | 26 | (623 | ) | — | (323 | ) | 565 | 345 | (940 | ) | — | (30 | ) | ||||||||||||||||||||||||||
Amount | $ | 2,683 | $ | 232 | $ | (5,728 | ) | $ | — | $ | (2,813 | ) | $ | 8,474 | $ | 5,720 | $ | (13,207 | ) | $ | — | $ | 987 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 726 | 37 | (801 | ) | — | (38 | ) | 1,390 | 283 | (658 | ) | — | 1,015 | |||||||||||||||||||||||||||
Amount | $ | 6,962 | $ | 326 | $ | (7,291 | ) | $ | — | $ | (3 | ) | $ | 20,809 | $ | 4,645 | $ | (8,649 | ) | $ | — | $ | 16,805 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 184 | 1 | (22 | ) | — | 163 | 14 | — | — | — | 14 | |||||||||||||||||||||||||||||
Amount | $ | 2,249 | $ | 6 | $ | (271 | ) | $ | — | $ | 1,984 | $ | 207 | $ | — | $ | — | $ | — | $ | 207 | |||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 39 | — | (10 | ) | — | 29 | 6 | — | — | — | 6 | |||||||||||||||||||||||||||||
Amount | $ | 433 | $ | 4 | $ | (120 | ) | $ | — | $ | 317 | $ | 85 | $ | 4 | $ | — | $ | — | $ | 89 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 59 | 3 | (20 | ) | — | 42 | 96 | — | (2 | ) | — | 94 | ||||||||||||||||||||||||||||
Amount | $ | 619 | $ | 29 | $ | (192 | ) | $ | — | $ | 456 | $ | 994 | $ | 2 | $ | (21 | ) | $ | — | $ | 975 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 18 | — | (3 | ) | — | 15 | — | — | — | — | — | |||||||||||||||||||||||||||||
Amount | $ | 225 | $ | — | $ | (34 | ) | $ | — | $ | 191 | $ | 5 | $ | 2 | $ | — | $ | — | $ | 7 | |||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,675 | 269 | (430 | ) | — | 3,514 | 1,549 | 1,024 | (1,498 | ) | — | 1,075 | ||||||||||||||||||||||||||||
Amount | $ | 35,950 | $ | 2,686 | $ | (4,885 | ) | $ | — | $ | 33,751 | $ | 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) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 161 | $ | 1,614 | |||||
For the Year Ended October 31, 2008 | 327 | $ | 5,270 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. |
20
9. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
21
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 10.23 | $ | 0.13 | $ | — | $ | 2.50 | $ | 2.63 | $ | (0.24 | ) | $ | — | $ | — | $ | (0.24 | ) | $ | 2.39 | $ | 12.62 | ||||||||||||||||||||
B | 9.40 | 0.08 | — | 2.31 | 2.39 | (0.14 | ) | — | — | (0.14 | ) | 2.25 | 11.65 | |||||||||||||||||||||||||||||||
C | 9.29 | 0.04 | — | 2.28 | 2.32 | (0.15 | ) | — | — | (0.15 | ) | 2.17 | 11.46 | |||||||||||||||||||||||||||||||
I | 10.25 | 0.05 | — | 2.60 | 2.65 | (0.31 | ) | — | — | (0.31 | ) | 2.34 | 12.59 | |||||||||||||||||||||||||||||||
R3 | 10.51 | 0.08 | — | 2.56 | 2.64 | (0.27 | ) | — | — | (0.27 | ) | 2.37 | 12.88 | |||||||||||||||||||||||||||||||
R4 | 10.58 | 0.14 | — | 2.56 | 2.70 | (0.30 | ) | — | — | (0.30 | ) | 2.40 | 12.98 | |||||||||||||||||||||||||||||||
R5 | 10.60 | 0.08 | — | 2.66 | 2.74 | (0.30 | ) | — | — | (0.30 | ) | 2.44 | 13.04 | |||||||||||||||||||||||||||||||
Y | 10.62 | 0.19 | — | 2.57 | 2.76 | (0.31 | ) | — | — | (0.31 | ) | 2.45 | 13.07 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 20.34 | 0.07 | — | (7.81 | ) | (7.74 | ) | — | (3.20 | ) | — | (3.20 | ) | (10.94 | ) | 9.40 | ||||||||||||||||||||||||||||
C | 20.16 | 0.08 | — | (7.75 | ) | (7.67 | ) | — | (3.20 | ) | — | (3.20 | ) | (10.87 | ) | 9.29 | ||||||||||||||||||||||||||||
I(f) | 17.53 | 0.06 | — | (7.34 | ) | (7.28 | ) | — | — | — | — | (7.28 | ) | 10.25 | ||||||||||||||||||||||||||||||
R3 | 22.33 | 0.18 | — | (8.77 | ) | (8.59 | ) | (0.03 | ) | (3.20 | ) | — | (3.23 | ) | (11.82 | ) | 10.51 | |||||||||||||||||||||||||||
R4 | 22.39 | 0.05 | — | (8.59 | ) | (8.54 | ) | (0.07 | ) | (3.20 | ) | — | (3.27 | ) | (11.81 | ) | 10.58 | |||||||||||||||||||||||||||
R5 | 22.45 | 0.25 | — | (8.78 | ) | (8.53 | ) | (0.12 | ) | (3.20 | ) | — | (3.32 | ) | (11.85 | ) | 10.60 | |||||||||||||||||||||||||||
Y | 22.48 | 0.29 | — | (8.81 | ) | (8.52 | ) | (0.14 | ) | (3.20 | ) | — | (3.34 | ) | (11.86 | ) | 10.62 | |||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 15.14 | (0.07 | ) | — | 5.70 | 5.63 | — | (0.43 | ) | — | (0.43 | ) | 5.20 | 20.34 | ||||||||||||||||||||||||||||||
C | 15.01 | (0.07 | ) | — | 5.65 | 5.58 | — | (0.43 | ) | — | (0.43 | ) | 5.15 | 20.16 | ||||||||||||||||||||||||||||||
R3(j) | 17.07 | 0.06 | — | 5.20 | 5.26 | — | — | — | — | 5.26 | 22.33 | |||||||||||||||||||||||||||||||||
R4(j) | 17.07 | 0.09 | — | 5.23 | 5.32 | — | — | — | — | 5.32 | 22.39 | |||||||||||||||||||||||||||||||||
R5(j) | 17.07 | 0.13 | — | 5.25 | 5.38 | — | — | — | — | 5.38 | 22.45 | |||||||||||||||||||||||||||||||||
Y | 16.67 | 0.05 | — | 6.39 | 6.44 | (0.20 | ) | (0.43 | ) | — | (0.63 | ) | 5.81 | 22.48 | ||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
B | 12.35 | 0.03 | — | 2.76 | 2.79 | — | — | — | — | 2.79 | 15.14 | |||||||||||||||||||||||||||||||||
C | 12.27 | 0.01 | — | 2.73 | 2.74 | — | — | — | — | 2.74 | 15.01 | |||||||||||||||||||||||||||||||||
Y | 13.55 | 0.25 | — | 2.98 | 3.23 | (0.11 | ) | — | — | (0.11 | ) | 3.12 | 16.67 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 11.22 | 0.05 | — | 1.86 | 1.91 | — | — | — | — | 1.91 | 13.13 | |||||||||||||||||||||||||||||||||
B | 10.64 | (0.04 | ) | — | 1.75 | 1.71 | — | — | — | — | 1.71 | 12.35 | ||||||||||||||||||||||||||||||||
C | 10.57 | (0.04 | ) | — | 1.74 | 1.70 | — | — | — | — | 1.70 | 12.27 | ||||||||||||||||||||||||||||||||
Y | 11.53 | 0.12 | — | 1.90 | 2.02 | — | — | — | — | 2.02 | 13.55 |
(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) | Commenced operations on May 30, 2008. | |
(g) | Not annualized. | |
(h) | Annualized. | |
(i) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(j) | Commenced operations on December 22, 2006. |
22
Ratio of Expenses to Average | ||||||||||||||||||||||||||||
Ratio of Expenses to Average | Ratio of Expenses to Average | Net Assets After Waivers and | Ratio of Net | |||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Reimbursements and | Investment Income | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Excluding Expenses not | to Average Net | Portfolio | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Subject to Cap(c) | Assets | Turnover Rate(d) | ||||||||||||||||||||||
26.36 | % | $ | 207,600 | 1.65 | % | 1.42 | % | 1.42 | % | 1.20 | % | 168 | % | |||||||||||||||
25.85 | 17,390 | 2.74 | 1.84 | 1.84 | 0.85 | — | ||||||||||||||||||||||
25.38 | 28,852 | 2.34 | 2.23 | 2.23 | 0.45 | — | ||||||||||||||||||||||
26.81 | 2,230 | 1.25 | 1.23 | 1.23 | 0.51 | — | ||||||||||||||||||||||
25.94 | 466 | 1.85 | 1.82 | 1.82 | 0.72 | — | ||||||||||||||||||||||
26.42 | 1,769 | 1.38 | 1.38 | 1.38 | 1.29 | — | ||||||||||||||||||||||
26.67 | 210 | 1.09 | 1.09 | 1.09 | 0.62 | — | ||||||||||||||||||||||
26.94 | 133,962 | 0.96 | 0.96 | 0.96 | 1.73 | — | ||||||||||||||||||||||
(44.50 | ) | 151,147 | 1.47 | 1.47 | 1.47 | 1.23 | 150 | |||||||||||||||||||||
(44.86 | ) | 17,068 | 2.45 | 2.11 | 2.11 | 0.50 | — | |||||||||||||||||||||
(44.92 | ) | 23,743 | 2.20 | 2.20 | 2.20 | 0.54 | — | |||||||||||||||||||||
(41.53 | ) (g) | 143 | 1.00 | (h) | 1.00 | (h) | 1.00 | (h) | 1.19 | (h) | — | |||||||||||||||||
(44.70 | ) | 74 | 1.99 | 1.79 | 1.79 | 1.13 | — | |||||||||||||||||||||
(44.39 | ) | 1,003 | 1.52 | 1.52 | 1.52 | 0.54 | — | |||||||||||||||||||||
(44.32 | ) | 10 | 1.10 | 1.10 | 1.10 | 1.57 | — | |||||||||||||||||||||
(44.22 | ) | 71,555 | 0.94 | 0.94 | 0.94 | 1.74 | — | |||||||||||||||||||||
39.15 | (i) | 241,239 | 1.49 | 1.49 | 1.49 | 0.31 | 147 | |||||||||||||||||||||
38.17 | (i) | 37,545 | 2.46 | 2.18 | 2.18 | (0.39 | ) | — | ||||||||||||||||||||
38.17 | (i) | 31,076 | 2.21 | 2.21 | 2.21 | (0.42 | ) | — | ||||||||||||||||||||
30.81 | (g) | 28 | 1.71 | (h) | 1.71 | (h) | 1.71 | (h) | 0.40 | (h) | — | |||||||||||||||||
31.17 | (g) | 13 | 1.41 | (h) | 1.41 | (h) | 1.41 | (h) | 0.53 | (h) | — | |||||||||||||||||
31.52 | (g) | 13 | 1.11 | (h) | 1.11 | (h) | 1.11 | (h) | 0.83 | (h) | — | |||||||||||||||||
39.91 | (i) | 127,314 | 0.95 | 0.95 | 0.95 | 0.84 | — | |||||||||||||||||||||
23.25 | 159,087 | 1.61 | 1.57 | 1.57 | 0.84 | 102 | ||||||||||||||||||||||
22.59 | 29,125 | 2.56 | 2.15 | 2.15 | 0.24 | — | ||||||||||||||||||||||
22.33 | 20,782 | 2.33 | 2.33 | 2.33 | 0.06 | — | ||||||||||||||||||||||
24.00 | 43,994 | 1.02 | 1.02 | 1.02 | 1.56 | — | ||||||||||||||||||||||
17.02 | 102,393 | 1.72 | 1.57 | 1.57 | 0.42 | 119 | ||||||||||||||||||||||
16.07 | 23,940 | 2.68 | 2.35 | 2.35 | (0.36 | ) | — | |||||||||||||||||||||
16.08 | 16,896 | 2.42 | 2.35 | 2.35 | (0.37 | ) | — | |||||||||||||||||||||
17.52 | 5,612 | 1.05 | 1.05 | 1.05 | 0.94 | — |
23
The Hartford Mutual Funds, Inc.
December 15, 2009
24
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity.
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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.
25
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.
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp.
Mr. Arena serves as Executive Vice President of Hartford Life. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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.
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005.
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 from 2005 — 2006.
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009.
26
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987.
Mr. Sloane is a Senior Vice President of Hartford Life. 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.
27
DRD* | 20.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||
Class A | 0.235 | N/A | N/A | 0.235 | ||||||||
Class B | 0.138 | N/A | N/A | 0.138 | ||||||||
Class C | 0.145 | N/A | N/A | 0.145 | ||||||||
Class I | 0.313 | N/A | N/A | 0.313 | ||||||||
Class R3 | 0.274 | N/A | N/A | 0.274 | ||||||||
Class R4 | 0.303 | N/A | N/A | 0.303 | ||||||||
Class R5 | 0.296 | N/A | N/A | 0.296 | ||||||||
Class Y | 0.314 | N/A | N/A | 0.314 |
28
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,285.10 | $ | 8.41 | $ | 1,000.00 | $ | 1,017.85 | $ | 7.43 | 1.46 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,281.60 | $ | 11.21 | $ | 1,000.00 | $ | 1,015.38 | $ | 9.91 | 1.95 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,279.00 | $ | 13.04 | $ | 1,000.00 | $ | 1,013.76 | $ | 11.52 | 2.27 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,287.30 | $ | 7.21 | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1.25 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,282.90 | $ | 10.47 | $ | 1,000.00 | $ | 1,016.03 | $ | 9.25 | 1.82 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,285.10 | $ | 7.78 | $ | 1,000.00 | $ | 1,018.40 | $ | 6.87 | 1.35 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,287.30 | $ | 6.23 | $ | 1,000.00 | $ | 1,019.76 | $ | 5.50 | 1.08 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,287.70 | $ | 5.42 | $ | 1,000.00 | $ | 1,020.47 | $ | 4.79 | 0.94 | 184 | 365 |
29
30
31
32
33
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
12 | ||||
22 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 | ||||
29 | ||||
30 |
The Hartford International Small Company Fund inception 04/30/2001 | ||
(subadvised by Wellington Management Company, LLP) | Investment objective — Seeks capital appreciation. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
International Small Company A# | 43.97 | % | 6.06 | % | 8.08 | % | ||||||
International Small Company A## | 36.05 | % | 4.87 | % | 7.36 | % | ||||||
International Small Company B# | 43.38 | % | 5.39 | % | NA* | |||||||
International Small Company B## | 38.38 | % | 5.13 | % | NA* | |||||||
International Small Company C# | 42.86 | % | 5.26 | % | 7.28 | % | ||||||
International Small Company C## | 41.86 | % | 5.26 | % | 7.28 | % | ||||||
International Small Company I# | 44.32 | % | 6.23 | % | 8.18 | % | ||||||
International Small Company Y# | 44.48 | % | 6.54 | % | 8.56 | % | ||||||
S&P EPAC SmallCap Index | 43.12 | % | 7.25 | % | 9.30 | % |
# | 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, 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 10/31/09, 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. |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||
Simon H. Thomas | Daniel Maguire, CFA | |
Vice President | Vice President |
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 1.4 | % | ||
Banks (Financials) | 2.3 | |||
Capital Goods (Industrials) | 18.0 | |||
Commercial & Professional Services (Industrials) | 5.2 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 3.6 | |||
Consumer Services (Consumer Discretionary) | 4.0 | |||
Diversified Financials (Financials) | 5.0 | |||
Energy (Energy) | 6.5 | |||
Food & Staples Retailing (Consumer Staples) | 1.0 | |||
Food, Beverage & Tobacco (Consumer Staples) | 3.5 | |||
Health Care Equipment & Services (Health Care) | 2.5 | |||
Household & Personal Products (Consumer Staples) | 0.9 | |||
Insurance (Financials) | 1.6 | |||
Materials (Materials) | 6.8 | |||
Media (Consumer Discretionary) | 2.1 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 4.3 | |||
Real Estate (Financials) | 3.5 | |||
Retailing (Consumer Discretionary) | 7.8 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 3.4 | |||
Software & Services (Information Technology) | 6.1 | |||
Technology Hardware & Equipment (Information Technology) | 2.1 | |||
Transportation (Industrials) | 4.5 | |||
Utilities (Utilities) | 1.7 | |||
Short-Term Investments | 1.4 | |||
Other Assets and Liabilities | 0.8 | |||
Total | 100.0 | % | ||
3
as of October 31, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 8.2 | % | ||
Belgium | 2.9 | |||
Brazil | 2.5 | |||
Finland | 2.0 | |||
France | 10.5 | |||
Germany | 4.3 | |||
Guernsey Channel Isle | 0.7 | |||
Hong Kong | 3.5 | |||
India | 0.5 | |||
Indonesia | 0.4 | |||
Israel | 0.7 | |||
Italy | 4.3 | |||
Japan | 21.8 | |||
Jersey | 0.9 | |||
Luxembourg | 0.6 | |||
Netherlands | 1.5 | |||
Norway | 1.5 | |||
Singapore | 1.2 | |||
South Korea | 3.4 | |||
Sweden | 1.8 | |||
Switzerland | 4.2 | |||
United Kingdom | 20.0 | |||
United States | 0.4 | |||
Short-Term Investments | 1.4 | |||
Other Assets and Liabilities | 0.8 | |||
Total | 100.0 | % | ||
4
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 97.8% | ||||||||
Australia - 8.2% | ||||||||
374 | AJ Lucas Group Ltd. | $ | 1,441 | |||||
278 | Aquarius Platinum Ltd.• | 1,186 | ||||||
217 | Ausenco Ltd. | 938 | ||||||
201 | Bendigo and Adelaide Bank Ltd. | 1,629 | ||||||
218 | Brambles Ltd. | 1,374 | ||||||
39 | Campbell Brothers | 1,010 | ||||||
359 | Centennial Coal Co., Ltd. | 1,003 | ||||||
216 | Karoon Gas Australia Ltd.• | 1,463 | ||||||
193 | Toll Holdings Ltd. | 1,467 | ||||||
364 | Whitehaven Coal Ltd. | 1,262 | ||||||
36 | Worleyparsons Ltd. | 830 | ||||||
13,603 | ||||||||
Belgium - 2.9% | ||||||||
32 | CFE | 1,799 | ||||||
5 | D’ieteren S.A. | 1,883 | ||||||
28 | UCB S.A. | 1,175 | ||||||
4,857 | ||||||||
Brazil - 2.5% | ||||||||
89 | All America Latina Logistica S.A. | 650 | ||||||
116 | Duratex S.A. | 806 | ||||||
74 | Hypermarcas S.A.• | 1,484 | ||||||
109 | Localiza Rent a Car S.A. | 1,138 | ||||||
4,078 | ||||||||
Finland - 2.0% | ||||||||
26 | Kone Oyj Class B | 982 | ||||||
55 | Nokian Rendaat Oyj | 1,183 | ||||||
36 | Outotec Oyj | 1,154 | ||||||
3,319 | ||||||||
France - 10.5% | ||||||||
12 | BioMerieux S.A. | 1,347 | ||||||
7 | Bollore | 1,142 | ||||||
24 | Bureau Veritas S.A. | 1,349 | ||||||
19 | Eurofins Scientific | 849 | ||||||
213 | GameLoft • | 1,016 | ||||||
21 | Imerys S.A. | 1,124 | ||||||
30 | Klepierre | 1,234 | ||||||
44 | Maurel ET Prom | 891 | ||||||
25 | Orpea | 1,146 | ||||||
15 | Seche Environment | 1,285 | ||||||
52 | Sechilienne S.A. | 2,089 | ||||||
5 | Vallourec | 823 | ||||||
11 | Vilmorin & Cie | 1,179 | ||||||
8 | Virbac S.A. | 778 | ||||||
25 | Wendel | 1,410 | ||||||
17,662 | ||||||||
Germany - 4.3% | ||||||||
62 | ElringKlinger AG | 1,226 | ||||||
25 | Hochtief AG | 1,861 | ||||||
98 | Kontron AG | 1,155 | ||||||
122 | Praktiker Bau-Und Heimwerkermaerkte Holding AG | 1,485 | ||||||
16 | Rheinmetall AG | 845 | ||||||
8 | Salzgitter AG | 731 | ||||||
7,303 | ||||||||
Guernsey Channel Isle - 0.7% | ||||||||
491 | London & Stamford Property Ltd. | 1,087 | ||||||
Hong Kong - 3.5% | ||||||||
181 | ASM Pacific Technology | 1,409 | ||||||
797 | Cathay Pacific Airways Ltd. | 1,291 | ||||||
842 | Noble Group Ltd. | 1,539 | ||||||
3,194 | Sa Sa International Holdings Ltd. | 1,588 | ||||||
5,827 | ||||||||
India - 0.5% | ||||||||
51 | Educomp Solutions Ltd. | 867 | ||||||
Indonesia - 0.4% | ||||||||
2,611 | Bumi Resources TBK PT | 629 | ||||||
Israel - 0.7% | ||||||||
313 | Bank Hapoalim B.M.• | 1,142 | ||||||
Italy - 4.3% | ||||||||
134 | Bulgari S.p.A. | 1,099 | ||||||
46 | DiaSorin S.p.A. | 1,697 | ||||||
76 | Finmeccanica S.p.A. | 1,274 | ||||||
188 | Gruppo Coin S.p.A.• | 1,122 | ||||||
632 | Immobiliare Grande Distribuzione | 1,361 | ||||||
860 | Pirelli & C. Real Estate S.p.A. | 681 | ||||||
7,234 | ||||||||
Japan - 21.8% | ||||||||
101 | Air Water, Inc. | 1,191 | ||||||
133 | Asics Corp. | 1,185 | ||||||
208 | Bank of Yokohama Ltd. | 1,021 | ||||||
32 | Benesse Holdings, Inc. | 1,394 | ||||||
63 | Cosmos Pharmaceutical Corp. | 1,626 | ||||||
1 | Cyberagent, Inc. | 1,392 | ||||||
474 | Dainippon Screen Mfg Co., Ltd. | 2,014 | ||||||
— | EPS Co., Ltd. | 1,243 | ||||||
22 | Gree, Inc. | 1,228 | ||||||
285 | Hino Motors Ltd. | 1,054 | ||||||
167 | Hitachi Metals Ltd. | 1,593 | ||||||
24 | Ibiden Co., Ltd. | 874 | ||||||
36 | Jafco Co., Ltd. | 965 | ||||||
1 | Jupiter Telecommunications Co., Ltd. | 1,298 | ||||||
— | Kakaku.com, Inc. | 1,057 | ||||||
46 | Makita Corp. | 1,531 | ||||||
45 | Modec, Inc. | 902 | ||||||
75 | Nabtesco Corp. | 863 | ||||||
69 | Nikon Corp. | 1,279 | ||||||
245 | Nippon Carbon Co., Ltd. | 836 | ||||||
133 | Nippon Denko Co., Ltd. | 946 | ||||||
— | Osaka Securities Exchange Co., Ltd. | 2,097 | ||||||
123 | Shinko Plantech Co., Ltd. | 1,259 | ||||||
100 | Shionogi & Co., Ltd. | 2,159 | ||||||
95 | Square Enix Holdings Co., Ltd. | 2,357 | ||||||
71 | Tokyo Ohka Kogyo Co., Ltd. | 1,362 | ||||||
320 | Toyo Engineering Corp. | 1,066 | ||||||
12 | Toyo Tanso Co., Ltd. | 593 | ||||||
36,385 | ||||||||
Jersey - 0.9% | ||||||||
24 | Rangold Resources Ltd. | 1,551 | ||||||
Luxembourg - 0.6% | ||||||||
68 | Reinet Investments S.A.• | 1,042 | ||||||
5
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 97.8% — (continued) | ||||||||||||
Netherlands - 1.5% | ||||||||||||
41 | Qiagen N.V. • | $ | 847 | |||||||||
64 | TNT N.V. | 1,687 | ||||||||||
2,534 | ||||||||||||
Norway - 1.5% | ||||||||||||
179 | Kongsberg Gruppen ASA | 2,463 | ||||||||||
Singapore - 1.2% | ||||||||||||
411 | Hyflux Ltd. | 893 | ||||||||||
998 | Indofood Agri Resources Ltd.• | 1,191 | ||||||||||
2,084 | ||||||||||||
South Korea - 3.4% | ||||||||||||
7 | CJ Corp. | 1,237 | ||||||||||
19 | GS Engineering & Construction Corp. | 1,704 | ||||||||||
8 | Megastudy Co., Ltd. | 1,755 | ||||||||||
17 | Mirae Asset Securities Co., Ltd. | 905 | ||||||||||
5,601 | ||||||||||||
Sweden - 1.8% | ||||||||||||
112 | Bjoern Borg Ab | 875 | ||||||||||
104 | Swedish Match Ab | 2,135 | ||||||||||
3,010 | ||||||||||||
Switzerland - 4.2% | ||||||||||||
41 | Dufry Group | 2,588 | ||||||||||
52 | Logitech International S.A. • | 883 | ||||||||||
128 | Temenos Group AG • | 2,925 | ||||||||||
— | Vetropack Holding | 784 | ||||||||||
7,180 | ||||||||||||
United Kingdom - 20.0% | ||||||||||||
69 | AMEC plc | 915 | ||||||||||
491 | Arm Holdings plc | 1,193 | ||||||||||
250 | ASOS plc • | 1,612 | ||||||||||
203 | Babcock International Group plc | 2,020 | ||||||||||
419 | Brown (N) Group plc | 1,792 | ||||||||||
210 | Catlin Group Ltd. | 1,136 | ||||||||||
45 | Chemring Group plc | 1,962 | ||||||||||
489 | Chloride Group plc | 1,291 | ||||||||||
240 | Clapham House Group plc • | 262 | ||||||||||
93 | Close Brothers Group plc | 1,064 | ||||||||||
119 | Connaught plc | 790 | ||||||||||
324 | Domino’s Pizza UK & IRL plc | 1,619 | ||||||||||
431 | Game Group plc | 1,046 | ||||||||||
768 | Hampson Industries plc | 913 | ||||||||||
1,060 | Hansteen Holdings plc | 1,535 | ||||||||||
96 | Hunting plc | 823 | ||||||||||
165 | ICAP plc | 1,099 | ||||||||||
249 | IG Group Holdings plc | 1,232 | ||||||||||
132 | James Fisher & Sons plc | 936 | ||||||||||
35 | Kier Group plc | 551 | ||||||||||
182 | Lancashire Holdings Ltd. | 1,509 | ||||||||||
177 | Mears Group plc | 818 | ||||||||||
91 | Rightmove | 787 | ||||||||||
95 | Rotork plc | 1,773 | ||||||||||
72 | Ultra Electronics Holdings plc | 1,555 | ||||||||||
164 | VT Group plc | 1,457 | ||||||||||
306 | William Hill plc | 839 | ||||||||||
255 | Xchanging plc | 931 | ||||||||||
33,460 | ||||||||||||
United States - 0.4% | ||||||||||||
64 | Shanda Games Ltd. • | $ | 636 | |||||||||
Total common stocks (cost $137,873) | $ | 163,554 | ||||||||||
Total long-term investments (cost $137,873) | $ | 163,554 | ||||||||||
SHORT-TERM INVESTMENTS - 1.4% | ||||||||||||
Repurchase Agreements - 1.4% | �� | |||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $91, collateralized by GNMA 5.00%, 2039, value of $93) | ||||||||||||
$ | 91 | 0.08%, 10/30/2009 | �� | $ | 91 | |||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $535, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $546) | ||||||||||||
535 | 0.08%, 10/30/2009 | 535 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $596, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $608) | ||||||||||||
596 | 0.08%, 10/30/2009 | 596 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $6, collateralized by U.S. Treasury Note 2.75%, 2013, value of $6) | ||||||||||||
6 | 0.05%, 10/30/2009 | 6 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,033, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $1,053) | ||||||||||||
1,033 | 0.07%, 10/30/2009 | 1,033 | ||||||||||
2,261 | ||||||||||||
Total short-term investments (cost $2,261) | $ | 2,261 | ||||||||||
Total investments (cost $140,134)5 | 99.2 | % | $ | 165,815 | ||||||||
Other assets and liabilities | 0.8 | % | 1,405 | |||||||||
Total net assets | 100.0 | % | $ | 167,220 | ||||||||
6
October 31, 2009
(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 97.4% of total net assets at October 31, 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. |
5 | At October 31, 2009, the cost of securities for federal income tax purposes was $148,454 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 29,923 | ||
Unrealized Depreciation | (12,562 | ) | ||
Net Unrealized Appreciation | $ | 17,361 | ||
• | Currently non-income producing. |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Australian Dollar (Sell) | $ | 1,400 | $ | 1,403 | 11/02/09 | $ | 3 | |||||||||
Australian Dollar (Buy) | 165 | 168 | 11/05/09 | (3 | ) | |||||||||||
British Pound (Buy) | 424 | 424 | 11/04/09 | — | ||||||||||||
Euro (Sell) | 693 | 700 | 11/03/09 | 7 | ||||||||||||
Euro (Sell) | 417 | 417 | 11/04/09 | — | ||||||||||||
Norwegian Krone (Buy) | 246 | 246 | 11/02/09 | — | ||||||||||||
Singapore Dollar (Buy) | 154 | 154 | 11/02/09 | — | ||||||||||||
Swiss Franc (Sell) | 32 | 32 | 11/04/09 | — | ||||||||||||
$ | 7 | |||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Percentage of | ||||
Description | Net Assets | |||
Australian Dollar | 7.5 | % | ||
Brazilian Real | 2.5 | |||
British Pound | 22.3 | |||
Euro | 26.1 | |||
Hong Kong Dollar | 2.6 | |||
Indian Rupee | 0.5 | |||
Indonesian New Rupiah | 0.4 | |||
Israeli New Shekel | 0.7 | |||
Japanese Yen | 21.8 | |||
Norwegian Krone | 1.5 | |||
Republic of Korea Won | 3.4 | |||
Singapore Dollar | 2.1 | |||
Swedish Krona | 1.8 | |||
Swiss Franc | 4.2 | |||
United States Dollar | 1.8 | |||
Other Assets and Liabilities | 0.8 | |||
Total | 100.0 | % | ||
7
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 163,554 | $ | 4,714 | $ | 158,840 | $ | — | ||||||||
Short-Term Investments | 2,261 | — | 2,261 | — | ||||||||||||
Total | $ | 165,815 | $ | 4,714 | $ | 161,101 | $ | — | ||||||||
Other Financial Instruments * | $ | 10 | $ | — | $ | 10 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 3 | $ | — | $ | 3 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $140,134) | $ | 165,815 | ||
Cash | 1 | |||
Foreign currency on deposit with custodian (cost $1) | 1 | |||
Unrealized appreciation on forward foreign currency contracts | 10 | |||
Receivables: | ||||
Investment securities sold | 2,542 | |||
Fund shares sold | 111 | |||
Dividends and interest | 293 | |||
Other assets | 39 | |||
Total assets | 168,812 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 3 | |||
Payables: | ||||
Investment securities purchased | 1,170 | |||
Fund shares redeemed | 335 | |||
Investment management fees | 25 | |||
Distribution fees | 6 | |||
Accrued expenses | 53 | |||
Total liabilities | 1,592 | |||
Net assets | $ | 167,220 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 242,377 | |||
Accumulated undistributed net investment income | 975 | |||
Accumulated net realized loss on investments and foreign currency transactions | (101,824 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 25,692 | |||
Net assets | $ | 167,220 | ||
Shares authorized | 350,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 10.74/$11.37 | ||
Shares outstanding | 4,981 | |||
Net assets | $ | 53,517 | ||
Class B: Net asset value per share | $ | 10.28 | ||
Shares outstanding | 856 | |||
Net assets | $ | 8,798 | ||
Class C: Net asset value per share | $ | 10.10 | ||
Shares outstanding | 1,160 | |||
Net assets | $ | 11,713 | ||
Class I: Net asset value per share | $ | 10.70 | ||
Shares outstanding | 678 | |||
Net assets | $ | 7,255 | ||
Class Y: Net asset value per share | $ | 10.89 | ||
Shares outstanding | 7,892 | |||
Net assets | $ | 85,937 | ||
9
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 2,989 | ||
Interest | 4 | |||
Securities lending | 56 | |||
Less: Foreign tax withheld | (289 | ) | ||
Total investment income | 2,760 | |||
Expenses: | ||||
Investment management fees | 1,206 | |||
Transfer agent fees | 358 | |||
Distribution fees | ||||
Class A | 117 | |||
Class B | 75 | |||
Class C | 100 | |||
Custodian fees | 54 | |||
Accounting services fees | 24 | |||
Registration and filing fees | 62 | |||
Board of Directors’ fees | 5 | |||
Audit fees | 10 | |||
Other expenses | 39 | |||
Total expenses (before waivers and fees paid indirectly) | 2,050 | |||
Expense waivers | (159 | ) | ||
Transfer agent fee waivers | (161 | ) | ||
Commission recapture | (4 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (324 | ) | ||
Total expenses, net | 1,726 | |||
Net Investment Income | 1,034 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (37,660 | ) | ||
Net realized loss on forward foreign currency contracts | (610 | ) | ||
Net realized gain on other foreign currency transactions | 22 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (38,248 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 88,262 | |||
Net unrealized appreciation of forward foreign currency contracts | 474 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (16 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 88,720 | |||
Net Gain on Investments and Foreign Currency Transactions | 50,472 | |||
Net Increase in Net Assets Resulting from Operations | $ | 51,506 | ||
10
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 1,034 | $ | 2,445 | ||||
Net realized loss on investments and foreign currency transactions | (38,248 | ) | (63,277 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 88,720 | (104,723 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 51,506 | (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 | (12,038 | ) | (17,854 | ) | ||||
Class B | (1,336 | ) | (505 | ) | ||||
Class C | (2,452 | ) | (4,298 | ) | ||||
Class I | 4,501 | 2,136 | ||||||
Class Y | 4,318 | 11,404 | ||||||
Net decrease from capital share transactions | (7,007 | ) | (9,117 | ) | ||||
Net Increase (Decrease) In Net Assets | 44,009 | (215,259 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 123,211 | 338,470 | ||||||
End of period | $ | 167,220 | $ | 123,211 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 975 | $ | 937 | ||||
11
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The |
12
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 |
13
October 31, 2009
(000’s Omitted)
data for substantially the full term of the security. Level 2 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 |
14
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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 may use 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 October 31, 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 of the Fund are declared and paid annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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). |
15
October 31, 2009
(000’s Omitted)
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 an 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 October 31, 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 October 31, 2009, the Fund had no outstanding when-issued or delayed delivery securities. | ||
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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||
Foreign exchange contracts | Unrealized appreciation on forward | $10 | Unrealized depreciation on forward | $3 | ||
foreign currency contracts | foreign currency contracts |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | (610 | ) | $ | — | $ | (610 | ) | ||||||||||
Total | $ | — | $ | — | $ | — | $ | (610 | ) | $ | — | $ | (610 | ) | ||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | 474 | — | $ | 474 | |||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | 474 | $ | — | $ | 474 | ||||||||||||
16
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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 490 | $ | 25,072 | ||||
Long-Term Capital Gains * | — | 15,515 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 2,063 | ||
Accumulated Capital Losses * | (94,594 | ) | ||
Unrealized Appreciation † | 17,374 | |||
Total Accumulated Deficit | $ | (75,157 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
17
October 31, 2009
(000’s Omitted)
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $506, increase accumulated net realized gain on investments by $414, and increase paid-in-capital by $92. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 47,790 | ||
2017 | 46,804 | |||
Total | $ | 94,594 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 | % |
18
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 year ended October 31, 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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.38 | % | 1.52 | % | 1.49 | % | 1.58 | % | 1.55 | % | ||||||||||
Class B Shares | 1.80 | 2.13 | 2.25 | 2.22 | 2.30 | |||||||||||||||
Class C Shares | 2.14 | 2.28 | 2.23 | 2.33 | 2.30 | |||||||||||||||
Class I Shares | 1.09 | 1.16 | 1.18 | * | ||||||||||||||||
Class Y Shares | 1.04 | 1.01 | 1.01 | 1.18 | 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $104 and contingent deferred sales charges of $24 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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. |
19
October 31, 2009
(000’s Omitted)
For the year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $21. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $207 for providing such services. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 199,789 | ||
Sales Proceeds Excluding U.S. Government Obligations | 209,765 |
6. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 871 | — | (2,428 | ) | — | (1,557 | ) | 2,993 | 1,057 | (6,034 | ) | — | (1,984 | ) | ||||||||||||||||||||||||||
Amount | $ | 7,583 | $ | — | $ | (19,621 | ) | $ | — | $ | (12,038 | ) | $ | 39,053 | $ | 15,812 | $ | (72,719 | ) | $ | — | $ | (17,854 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 91 | — | (267 | ) | — | (176 | ) | 156 | 150 | (402 | ) | — | (96 | ) | ||||||||||||||||||||||||||
Amount | $ | 767 | $ | — | $ | (2,103 | ) | $ | — | $ | (1,336 | ) | $ | 2,020 | $ | 2,156 | $ | (4,681 | ) | $ | — | $ | (505 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 271 | — | (607 | ) | — | (336 | ) | 304 | 230 | (963 | ) | — | (429 | ) | ||||||||||||||||||||||||||
Amount | $ | 2,188 | $ | — | $ | (4,640 | ) | $ | — | $ | (2,452 | ) | $ | 3,886 | $ | 3,279 | $ | (11,463 | ) | $ | — | $ | (4,298 | ) | ||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 561 | 1 | (85 | ) | — | 477 | 265 | 2 | (76 | ) | — | 191 | ||||||||||||||||||||||||||||
Amount | $ | 5,193 | $ | 10 | $ | (702 | ) | $ | — | $ | 4,501 | $ | 2,796 | $ | 29 | $ | (689 | ) | $ | — | $ | 2,136 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,125 | 61 | (538 | ) | — | 648 | 1,470 | 1,072 | (2,550 | ) | — | (8 | ) | |||||||||||||||||||||||||||
Amount | $ | 8,165 | $ | 479 | $ | (4,326 | ) | $ | — | $ | 4,318 | $ | 19,741 | $ | 16,242 | $ | (24,579 | ) | $ | — | $ | 11,404 |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 39 | $ | 354 | |||||
For the Year Ended October 31, 2008 | 31 | $ | 393 |
20
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. | ||
9. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
21
— Selected Per-Share Data (a) — | ||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.45 | $ | 0.08 | $ | — | $ | 3.21 | $ | 3.29 | $ | — | $ | — | $ | — | $ | — | $ | 3.29 | $ | 10.74 | ||||||||||||||||||||||
B | 7.16 | 0.02 | — | 3.10 | 3.12 | — | — | — | — | 3.12 | 10.28 | |||||||||||||||||||||||||||||||||
C | 7.06 | (0.01 | ) | — | 3.05 | 3.04 | — | — | — | — | 3.04 | 10.10 | ||||||||||||||||||||||||||||||||
I | 7.47 | 0.06 | — | 3.23 | 3.29 | (0.06 | ) | — | — | (0.06 | ) | 3.23 | 10.70 | |||||||||||||||||||||||||||||||
Y | 7.60 | 0.09 | — | 3.27 | 3.36 | (0.07 | ) | — | — | (0.07 | ) | 3.29 | 10.89 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 17.35 | 0.02 | — | (8.20 | ) | (8.18 | ) | (0.06 | ) | (1.95 | ) | — | (2.01 | ) | (10.19 | ) | 7.16 | |||||||||||||||||||||||||||
C | 17.16 | — | — | (8.08 | ) | (8.08 | ) | (0.07 | ) | (1.95 | ) | — | (2.02 | ) | (10.10 | ) | 7.06 | |||||||||||||||||||||||||||
I | 18.02 | 0.11 | — | (8.48 | ) | (8.37 | ) | (0.23 | ) | (1.95 | ) | — | (2.18 | ) | (10.55 | ) | 7.47 | |||||||||||||||||||||||||||
Y | 18.26 | 0.18 | — | (8.66 | ) | (8.48 | ) | (0.23 | ) | (1.95 | ) | — | (2.18 | ) | (10.66 | ) | 7.60 | |||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 15.72 | (0.05 | ) | — | 3.76 | 3.71 | (0.08 | ) | (2.00 | ) | — | (2.08 | ) | 1.63 | 17.35 | |||||||||||||||||||||||||||||
C | 15.55 | (0.02 | ) | — | 3.69 | 3.67 | (0.06 | ) | (2.00 | ) | — | (2.06 | ) | 1.61 | 17.16 | |||||||||||||||||||||||||||||
I(f) | 17.10 | 0.02 | — | 0.90 | 0.92 | — | — | — | — | 0.92 | 18.02 | |||||||||||||||||||||||||||||||||
Y | 16.37 | 0.02 | — | 4.06 | 4.08 | (0.19 | ) | (2.00 | ) | — | (2.19 | ) | 1.89 | 18.26 | ||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 13.91 | (0.01 | ) | — | 3.51 | 3.50 | (0.16 | ) | (1.53 | ) | — | (1.69 | ) | 1.81 | 15.72 | |||||||||||||||||||||||||||||
C | 13.78 | (0.03 | ) | — | 3.48 | 3.45 | (0.15 | ) | (1.53 | ) | — | (1.68 | ) | 1.77 | 15.55 | |||||||||||||||||||||||||||||
Y | 14.41 | 0.15 | — | 3.64 | 3.79 | (0.30 | ) | (1.53 | ) | — | (1.83 | ) | 1.96 | 16.37 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 13.44 | 0.06 | — | 2.25 | 2.31 | — | (1.48 | ) | — | (1.48 | ) | 0.83 | 14.27 | |||||||||||||||||||||||||||||||
B | 13.23 | — | — | 2.16 | 2.16 | — | (1.48 | ) | — | (1.48 | ) | 0.68 | 13.91 | |||||||||||||||||||||||||||||||
C | 13.12 | (0.01 | ) | — | 2.15 | 2.14 | — | (1.48 | ) | — | (1.48 | ) | 0.66 | 13.78 | ||||||||||||||||||||||||||||||
Y | 13.54 | 0.12 | — | 2.27 | 2.39 | (0.04 | ) | (1.48 | ) | — | (1.52 | ) | 0.87 | 14.41 |
(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) | Commenced operations on May 31, 2007. | |
(g) | Not annualized. | |
(h) | Annualized. |
22
— Ratios and Supplemental Data — | ||||||||||||||||||||||||||||
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Turnover Rate(d) | ||||||||||||||||||||||
44.16 | % | $ | 53,517 | 1.81 | % | 1.39 | % | 1.39 | % | 0.64 | % | 151 | % | |||||||||||||||
43.58 | 8,798 | 2.89 | 1.80 | 1.80 | 0.25 | — | ||||||||||||||||||||||
43.06 | 11,713 | 2.55 | 2.14 | 2.14 | (0.10 | ) | — | |||||||||||||||||||||
44.32 | 7,255 | 1.09 | 1.09 | 1.09 | 0.59 | — | ||||||||||||||||||||||
44.48 | 85,937 | 1.05 | 1.05 | 1.05 | 1.06 | — | ||||||||||||||||||||||
(52.67 | ) | 48,739 | 1.52 | 1.52 | 1.52 | 0.79 | 121 | |||||||||||||||||||||
(52.96 | ) | 7,392 | 2.53 | 2.13 | 2.13 | 0.18 | — | |||||||||||||||||||||
(53.00 | ) | 10,563 | 2.28 | 2.28 | 2.28 | 0.02 | — | |||||||||||||||||||||
(52.43 | ) | 1,497 | 1.16 | 1.16 | 1.16 | 1.23 | — | |||||||||||||||||||||
(52.32 | ) | 55,020 | 1.01 | 1.01 | 1.01 | 1.36 | — | |||||||||||||||||||||
27.90 | 153,290 | 1.49 | 1.49 | 1.49 | 0.33 | 96 | ||||||||||||||||||||||
26.97 | 19,562 | 2.44 | 2.26 | 2.26 | (0.47 | ) | — | |||||||||||||||||||||
26.98 | 33,033 | 2.23 | 2.23 | 2.23 | (0.43 | ) | — | |||||||||||||||||||||
5.38 | (g) | 174 | 1.19 | (h) | 1.19 | (h) | 1.19 | (h) | 0.77 | (h) | — | |||||||||||||||||
28.48 | 132,411 | 1.01 | 1.01 | 1.01 | 0.75 | — | ||||||||||||||||||||||
29.36 | 69,998 | 1.74 | 1.60 | 1.60 | 0.56 | 107 | ||||||||||||||||||||||
28.51 | 11,960 | 2.66 | 2.24 | 2.24 | (0.08 | ) | — | |||||||||||||||||||||
28.35 | 18,486 | 2.43 | 2.35 | 2.35 | (0.22 | ) | — | |||||||||||||||||||||
29.89 | 86,707 | 1.20 | 1.20 | 1.20 | 0.97 | — | ||||||||||||||||||||||
18.90 | 34,896 | 1.82 | 1.60 | 1.60 | 0.71 | 112 | ||||||||||||||||||||||
17.96 | 6,101 | 2.78 | 2.35 | 2.35 | (0.02 | ) | — | |||||||||||||||||||||
17.96 | 12,614 | 2.46 | 2.35 | 2.35 | (0.06 | ) | — | |||||||||||||||||||||
19.40 | 65,828 | 1.28 | 1.20 | 1.20 | 1.13 | — |
23
The Hartford Mutual Funds, Inc.
December 15, 2009
24
25
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 - 2009). |
26
27
DRD* | 25.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class I | 0.058 | N/A | N/A | 0.058 | ||||||||||||
Class Y | 0.065 | N/A | N/A | 0.065 |
28
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,391.20 | $ | 8.68 | $ | 1,000.00 | $ | 1,017.95 | $ | 7.32 | 1.44 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,387.30 | $ | 11.43 | $ | 1,000.00 | $ | 1,015.63 | $ | 9.65 | 1.90 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,385.50 | $ | 13.23 | $ | 1,000.00 | $ | 1,014.12 | $ | 11.17 | 2.20 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,393.20 | $ | 6.21 | $ | 1,000.00 | $ | 1,020.01 | $ | 5.24 | 1.03 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,394.40 | $ | 5.91 | $ | 1,000.00 | $ | 1,020.27 | $ | 4.99 | 0.98 | 184 | 365 |
29
30
31
32
33
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
22 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 | ||||
29 | ||||
30 |
The Hartford MidCap Fund inception 12/31/1997 | ||
(subadvised by Wellington Management Company, LLP) | Investment objective — Seeks long-term growth of capital. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | 10 | ||||||||||
Year | Year | Year | ||||||||||
MidCap A# | 11.34 | % | 4.28 | % | 8.11 | % | ||||||
MidCap A## | 5.22 | % | 3.11 | % | 7.50 | % | ||||||
MidCap B# | 10.54 | % | 3.49 | % | NA* | |||||||
MidCap B## | 5.54 | % | 3.26 | % | NA* | |||||||
MidCap C# | 10.60 | % | 3.57 | % | 7.39 | % | ||||||
MidCap C## | 9.60 | % | 3.57 | % | 7.39 | % | ||||||
MidCap I# | 11.68 | % | 4.35 | % | 8.15 | % | ||||||
MidCap R3# | 11.62 | % | 4.70 | % | 8.61 | % | ||||||
MidCap R4# | 11.75 | % | 4.72 | % | 8.63 | % | ||||||
MidCap R5# | 11.87 | % | 4.75 | % | 8.64 | % | ||||||
MidCap Y# | 11.94 | % | 4.76 | % | 8.64 | % | ||||||
S&P MidCap 400 Index | 18.18 | % | 3.24 | % | 6.45 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. | |
(5) | Class I shares commenced operations on 2/27/09. Performance prior to 2/27/09 reflects Class A performance. Classes R3, R4 and R5 shares commenced operations on 5/29/09. Performance prior to 5/29/09 reflects Class Y performance. |
Phillip H. Perelmuter
Senior Vice President, Partner
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Banks (Financials) | 3.9 | % | ||
Capital Goods (Industrials) | 10.5 | |||
Commercial & Professional Services (Industrials) | 1.8 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 2.8 | |||
Consumer Services (Consumer Discretionary) | 4.4 | |||
Diversified Financials (Financials) | 1.6 | |||
Energy (Energy) | 8.6 | |||
Food, Beverage & Tobacco (Consumer Staples) | 1.5 | |||
Health Care Equipment & Services (Health Care) | 8.4 | |||
Household & Personal Products (Consumer Staples) | 0.9 | |||
Insurance (Financials) | 5.6 | |||
Materials (Materials) | 3.2 | |||
Media (Consumer Discretionary) | 3.3 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 5.9 | |||
Real Estate (Financials) | 2.3 | |||
Retailing (Consumer Discretionary) | 8.6 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 3.9 | |||
Software & Services (Information Technology) | 9.6 | |||
Technology Hardware & Equipment (Information Technology) | 4.1 | |||
Telecommunication Services (Services) | 1.0 | |||
Transportation (Industrials) | 1.4 | |||
Utilities (Utilities) | 3.5 | |||
Short-Term Investments | 2.8 | |||
Other Assets and Liabilities | 0.4 | |||
Total | 100.0 | % | ||
3
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 96.8% | ||||||||
Banks - 3.9% | ||||||||
8,253 | Huntington Bancshares, Inc. | $ | 31,445 | |||||
519 | M&T Bank Corp. | 32,648 | ||||||
521 | PNC Financial Services Group, Inc. | 25,503 | ||||||
511 | SunTrust Banks, Inc. | 9,769 | ||||||
99,365 | ||||||||
Capital Goods - 10.5% | ||||||||
787 | AMETEK, Inc. | 27,458 | ||||||
1,174 | BE Aerospace, Inc. • | 20,811 | ||||||
609 | Carlisle Cos., Inc. | 18,910 | ||||||
921 | IDEX Corp. | 26,179 | ||||||
1,113 | Lennox International, Inc. | 37,481 | ||||||
1,030 | Masco Corp. | 12,101 | ||||||
1,254 | PACCAR, Inc. | 46,908 | ||||||
444 | Parker-Hannifin Corp. | 23,493 | ||||||
134 | Precision Castparts Corp. | 12,801 | ||||||
642 | Rockwell Collins, Inc. | 32,339 | ||||||
232 | Stanley Works | 10,484 | ||||||
268,965 | ||||||||
Commercial & Professional Services - 1.8% | ||||||||
861 | Herman Miller, Inc. | 13,298 | ||||||
405 | HNI Corp. | 10,649 | ||||||
843 | Republic Services, Inc. | 21,851 | ||||||
45,798 | ||||||||
Consumer Durables & Apparel - 2.8% | ||||||||
955 | Hasbro, Inc. | 26,034 | ||||||
1,175 | Mattel, Inc. | 22,243 | ||||||
34 | NVR, Inc. • | 22,319 | ||||||
70,596 | ||||||||
Consumer Services - 4.4% | ||||||||
450 | Apollo Group, Inc. Class A • | 25,694 | ||||||
665 | Corinthian Colleges, Inc. • | 10,542 | ||||||
293 | DeVry, Inc. | 16,195 | ||||||
906 | International Game Technology | 16,163 | ||||||
282 | ITT Educational Services, Inc. • | 25,505 | ||||||
101 | Strayer Education, Inc. | 20,520 | ||||||
114,619 | ||||||||
Diversified Financials - 1.6% | ||||||||
62 | BlackRock, Inc. | 13,466 | ||||||
989 | Waddell and Reed Financial, Inc. Class A | 27,748 | ||||||
41,214 | ||||||||
Energy - 8.6% | ||||||||
935 | Cameco Corp. | 25,447 | ||||||
872 | Denbury Resources, Inc. • | 12,737 | ||||||
466 | Forest Oil Corp. • | 9,133 | ||||||
366 | Helmerich & Payne, Inc. | 13,919 | ||||||
1,335 | Nabors Industries Ltd. • | 27,817 | ||||||
352 | Noble Energy, Inc. | 23,089 | ||||||
566 | Overseas Shipholding Group, Inc. | 22,205 | ||||||
1,038 | Peabody Energy Corp. | 41,106 | ||||||
553 | St. Mary Land & Exploration Co. | 18,840 | ||||||
542 | Ultra Petroleum Corp. • | 26,329 | ||||||
220,622 | ||||||||
Food, Beverage & Tobacco - 1.5% | ||||||||
111 | Coca-Cola Enterprises, Inc. | 2,122 | ||||||
970 | Flowers Foods, Inc. | 22,664 | ||||||
969 | Smithfield Foods, Inc. • | 12,926 | ||||||
37,712 | ||||||||
Health Care Equipment & Services - 8.4% | ||||||||
812 | Beckman Coulter, Inc. | 52,249 | ||||||
239 | Cerner Corp. • | 18,204 | ||||||
1,146 | Coventry Health Care, Inc. • | 22,716 | ||||||
201 | Edwards Lifesciences Corp. • | 15,496 | ||||||
315 | Humana, Inc. • | 11,845 | ||||||
660 | Omnicare, Inc. | 14,300 | ||||||
1,078 | Patterson Cos., Inc. • | 27,524 | ||||||
619 | St. Jude Medical, Inc. • | 21,092 | ||||||
226 | Universal Health Services, Inc. Class B | 12,560 | ||||||
343 | Zimmer Holdings, Inc. • | 18,042 | ||||||
214,028 | ||||||||
Household & Personal Products - 0.9% | ||||||||
567 | Estee Lauder Co., Inc. | 24,110 | ||||||
Insurance - 5.6% | ||||||||
389 | Everest Re Group Ltd. | 34,034 | ||||||
1,203 | Fidelity National Financial, Inc. | 16,327 | ||||||
599 | Marsh & McLennan Cos., Inc. | 14,063 | ||||||
2,197 | Unum Group | 43,836 | ||||||
1,445 | W.R. Berkley Corp. | 35,716 | ||||||
143,976 | ||||||||
Materials - 3.2% | ||||||||
338 | Cliff’s Natural Resources, Inc. | 12,023 | ||||||
257 | FMC Corp. | 13,123 | ||||||
123 | Martin Marietta Materials, Inc. | 10,282 | ||||||
531 | Scotts Miracle-Gro Co. Class A | 21,581 | ||||||
1,517 | Steel Dynamics, Inc. | 20,306 | ||||||
257 | Teck Cominco Ltd. Class B | 7,444 | ||||||
84,759 | ||||||||
Media - 3.3% | ||||||||
407 | Discovery Communications, Inc. • | 11,203 | ||||||
1,547 | DreamWorks Animation SKG, Inc. • | 49,489 | ||||||
608 | Scripps Networks Interactive Class A | 22,947 | ||||||
83,639 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 5.9% | ||||||||
1,591 | Amylin Pharmaceuticals, Inc. • | 17,566 | ||||||
2,393 | King Pharmaceuticals, Inc. • | 24,236 | ||||||
382 | Life Technologies Corp. • | 18,028 | ||||||
1,141 | Mylan, Inc. • | 18,531 | ||||||
1,019 | Qiagen N.V. • | 21,232 | ||||||
224 | Regeneron Pharmaceuticals, Inc. • | 3,516 | ||||||
332 | Vertex Pharmaceuticals, Inc. • | 11,152 | ||||||
1,078 | Watson Pharmaceuticals, Inc. • | 37,111 | ||||||
151,372 | ||||||||
Real Estate - 2.3% | ||||||||
970 | Host Hotels & Resorts, Inc. | 9,811 | ||||||
408 | Liberty Property Trust | 11,971 | ||||||
253 | Public Storage | 18,609 | ||||||
289 | Simon Property Group, Inc. | 19,594 | ||||||
59,985 | ||||||||
Retailing - 8.6% | ||||||||
950 | Advance Automotive Parts, Inc. | 35,386 | ||||||
109 | AutoZone, Inc. • | 14,735 | ||||||
973 | Best Buy Co., Inc. | 37,151 | ||||||
332 | Big Lots, Inc. • | 8,311 | ||||||
480 | CarMax, Inc. • | 9,434 | ||||||
2,265 | Office Depot, Inc. • | 13,705 | ||||||
764 | O’Reilly Automotive, Inc. • | 28,493 | ||||||
1,226 | Penske Automotive Group, Inc. | 19,206 | ||||||
418 | Sherwin-Williams Co. | 23,848 |
4
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 96.8% — (continued) | ||||||||||||
Retailing - 8.6% — (continued) | ||||||||||||
1,380 | Staples, Inc. | $ | 29,950 | |||||||||
220,219 | ||||||||||||
Semiconductors & Semiconductor Equipment - 3.9% | ||||||||||||
891 | Altera Corp. | 17,635 | ||||||||||
417 | Analog Devices, Inc. | 10,683 | ||||||||||
264 | Intersil Corp. | 3,317 | ||||||||||
1,167 | Lam Research Corp. • | 39,345 | ||||||||||
979 | Maxim Integrated Products, Inc. | 16,318 | ||||||||||
597 | Xilinx, Inc. | 12,980 | ||||||||||
100,278 | ||||||||||||
Software & Services - 9.6% | ||||||||||||
870 | Autodesk, Inc. • | 21,697 | ||||||||||
912 | Check Point Software Technologies Ltd. ADR • | 28,336 | ||||||||||
282 | Equinix, Inc. • | 24,069 | ||||||||||
265 | Factset Research Systems, Inc. | 16,973 | ||||||||||
490 | Global Payments, Inc. | 24,118 | ||||||||||
705 | Micros Systems • | 18,984 | ||||||||||
1,167 | Red Hat, Inc. • | 30,112 | ||||||||||
1,158 | VeriSign, Inc. • | 26,416 | ||||||||||
3,006 | Western Union Co. | 54,612 | ||||||||||
245,317 | ||||||||||||
Technology Hardware & Equipment - 4.1% | ||||||||||||
84 | Itron, Inc. • | 5,055 | ||||||||||
464 | Juniper Networks, Inc. • | 11,844 | ||||||||||
203 | National Instruments Corp. | 5,423 | ||||||||||
1,084 | NetApp, Inc. • | 29,322 | ||||||||||
250 | Polycom, Inc. | 5,366 | ||||||||||
1,190 | Seagate Technology | 16,595 | ||||||||||
1,135 | Teradata Corp. • | 31,649 | ||||||||||
105,254 | ||||||||||||
Telecommunication Services - 1.0% | ||||||||||||
730 | American Tower Corp. Class A • | 26,872 | ||||||||||
Transportation - 1.4% | ||||||||||||
214 | Con-way, Inc. | 7,071 | ||||||||||
658 | J.B. Hunt Transport Services, Inc. | 19,794 | ||||||||||
390 | Kansas City Southern • | 9,445 | ||||||||||
36,310 | ||||||||||||
Utilities - 3.5% | ||||||||||||
1,463 | Northeast Utilities | 33,713 | ||||||||||
1,206 | UGI Corp. | 28,809 | ||||||||||
528 | Wisconsin Energy Corp. | 23,036 | ||||||||||
325 | Xcel Energy, Inc. | 6,124 | ||||||||||
91,682 | ||||||||||||
Total common stocks (cost $2,341,103) | $ | 2,486,692 | ||||||||||
Total long-term investments (cost $2,341,103) | $ | 2,486,692 | ||||||||||
SHORT-TERM INVESTMENTS - 2.8% | ||||||||||||
Repurchase Agreements - 2.8% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $2,901, collateralized by GNMA 5.00%, 2039, value of $2,959) | ||||||||||||
$ | 2,901 | 0.08%, 10/30/2009 | $ | 2,901 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $16,993, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - - 2047, value of $17,333) | ||||||||||||
$ | 16,993 | 0.08%, 10/30/2009 | $ | 16,993 | ||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $18,930, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $19,308) | ||||||||||||
18,929 | 0.08%, 10/30/2009 | 18,929 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $192, collateralized by U.S. Treasury Note 2.75%, 2013, value of $194) | ||||||||||||
192 | 0.05%, 10/30/2009 | 192 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $32,799, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $33,455) | ||||||||||||
32,798 | 0.07%, 10/30/2009 | 32,798 | ||||||||||
71,813 | ||||||||||||
Total short-term investments (cost $71,813) | $ | 71,813 | ||||||||||
Total investments (cost $2,412,916) ▲ | 99.6 | % | $ | 2,558,505 | ||||||||
Other assets and liabilities | 0.4 | % | 9,496 | |||||||||
Total net assets | 100.0 | % | $ | 2,568,001 | ||||||||
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 3.2% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $2,428,290 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 252,031 | ||
Unrealized Depreciation | (121,816 | ) | ||
Net Unrealized Appreciation | $ | 130,215 | ||
• | Currently non-income producing. |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value╪ | Amount | Date | (Depreciation) | ||||||||||||
Norwegian Krone (Sell) | $ | 1,452 | $ | 1,449 | 11/02/09 | $ | (3 | ) | ||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
6
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 2,486,692 | $ | 2,486,692 | $ | — | $ | — | ||||||||
Short-Term Investments | 71,813 | — | 71,813 | — | ||||||||||||
Total | $ | 2,558,505 | $ | 2,486,692 | $ | 71,813 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 3 | $ | — | $ | 3 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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. |
7
Assets: | ||||
Investments in securities, at market value (cost $2,412,916) | $ | 2,558,505 | ||
Cash | 1 | |||
Receivables: | ||||
Investment securities sold | 19,100 | |||
Fund shares sold | 9,166 | |||
Dividends and interest | 731 | |||
Other assets | 109 | |||
Total assets | 2,587,612 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 3 | |||
Bank overdraft — foreign cash | 10 | |||
Payables: | ||||
Investment securities purchased | 10,828 | |||
Fund shares redeemed | 7,569 | |||
Investment management fees | 320 | |||
Distribution fees | 156 | |||
Accrued expenses | 725 | |||
Total liabilities | 19,611 | |||
Net assets | $ | 2,568,001 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 2,865,197 | |||
Accumulated undistributed net investment income | — | |||
Accumulated net realized loss on investments and foreign currency transactions | (442,785 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 145,589 | |||
Net assets | $ | 2,568,001 | ||
Shares authorized | 660,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 16.20/$17.14 | ||
Shares outstanding | 106,094 | |||
Net assets | $ | 1,718,214 | ||
Class B: Net asset value per share | $ | 14.16 | ||
Shares outstanding | 9,680 | |||
Net assets | $ | 137,032 | ||
Class C: Net asset value per share | $ | 14.30 | ||
Shares outstanding | 24,710 | |||
Net assets | $ | 353,413 | ||
Class I: Net asset value per share | $ | 16.25 | ||
Shares outstanding | 6,873 | |||
Net assets | $ | 111,661 | ||
Class R3: Net asset value per share | $ | 17.58 | ||
Shares outstanding | 36 | |||
Net assets | $ | 638 | ||
Class R4: Net asset value per share | $ | 17.60 | ||
Shares outstanding | 191 | |||
Net assets | $ | 3,354 | ||
Class R5: Net asset value per share | $ | 17.62 | ||
Shares outstanding | 39 | |||
Net assets | $ | 693 | ||
Class Y: Net asset value per share | $ | 17.63 | ||
Shares outstanding | 13,783 | |||
Net assets | $ | 242,996 | ||
8
Investment Income: | ||||
Dividends | $ | 24,495 | ||
Interest | 158 | |||
Securities lending | 114 | |||
Less: Foreign tax withheld | (7 | ) | ||
Total investment income | 24,760 | |||
Expenses: | ||||
Investment management fees | 15,492 | |||
Administrative services fees | 2 | |||
Transfer agent fees | 5,425 | |||
Distribution fees | ||||
Class A | 3,541 | |||
Class B | 1,477 | |||
Class C | 2,889 | |||
Class R3 | — | |||
Class R4 | 2 | |||
Custodian fees | 16 | |||
Accounting services fees | 290 | |||
Registration and filing fees | 165 | |||
Board of Directors’ fees | 50 | |||
Audit fees | 62 | |||
Other expenses | 684 | |||
Total expenses (before waivers and fees paid indirectly) | 30,095 | |||
Transfer agent fee waivers | (86 | ) | ||
Commission recapture | (367 | ) | ||
Custodian fee offset | (1 | ) | ||
Total waivers and fees paid indirectly | (454 | ) | ||
Total expenses, net | 29,641 | |||
Net Investment Loss | (4,881 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (386,025 | ) | ||
Net realized gain on forward foreign currency contracts | 228 | |||
Net realized loss on other foreign currency transactions | (217 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions | (386,014 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 638,618 | |||
Net unrealized depreciation of forward foreign currency contracts | (3 | ) | ||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 3 | |||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 638,618 | |||
Net Gain on Investments and Foreign Currency Transactions | 252,604 | |||
Net Increase in Net Assets Resulting from Operations | $ | 247,723 | ||
9
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment loss | $ | (4,881 | ) | $ | (7,180 | ) | ||
Net realized loss on investments and foreign currency transactions | (386,014 | ) | (56,994 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 638,618 | (1,062,998 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 247,723 | (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 | 233,636 | 193,914 | ||||||
Class B | (67,140 | ) | (54,633 | ) | ||||
Class C | 46,199 | 412 | ||||||
Class I | 105,882 | — | ||||||
Class R3 | 647 | — | ||||||
Class R4 | 3,132 | — | ||||||
Class R5 | 671 | — | ||||||
Class Y | 53,506 | 122,137 | ||||||
Net increase from capital share transactions | 376,533 | 261,830 | ||||||
Net Increase (Decrease) In Net Assets | 624,256 | (1,379,464 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 1,943,745 | 3,323,209 | ||||||
End of period | $ | 2,568,001 | $ | 1,943,745 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | — | $ | — | ||||
10
1. | Organization: |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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, 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 that Class B shares automatically convert to Class A shares after 8 years. |
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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
Notes to Financial Statements — (continued)
October 31, 2009
(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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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. |
12
• | 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 |
13
Notes to Financial Statements — (continued)
October 31, 2009
(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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 may use 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 October 31, 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 of the Fund are declared and paid annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, |
14
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 October 31, 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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||
Foreign exchange contracts | Unrealized depreciation on forward foreign currency contracts | $ | 3 |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | 228 | $ | — | $ | 228 | ||||||||||||
Total | $ | — | $ | — | $ | — | $ | 228 | $ | — | $ | 228 | ||||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | (3 | ) | — | $ | (3 | ) | |||||||||||||||
Total | $ | — | $ | — | $ | — | $ | (3 | ) | $ | — | $ | (3 | ) | ||||||||||
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 RIC 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 intends to distribute substantially all of its income and capital 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. |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
b) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | — | $ | 151,000 | ||||
Long-Term Capital Gains * | — | 363,122 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Accumulated Capital Losses * | $ | (427,410 | ) | |
Unrealized Appreciation † | 130,214 | |||
Total Accumulated Deficit | $ | (297,196 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase accumulated undistributed net investment income by $4,881, increase accumulated net realized gain on investments by $466, and decrease paid-in-capital by $5,347. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 44,738 | ||
2017 | 382,672 | |||
Total | $ | 427,410 | ||
16
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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 | |||||||
1.37% | NA | NA | 1.12% | 1.67% | 1.37% | 1.07% | 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 a non-interest-bearing custody account. For the year ended October 31, 2009, these amounts are included in the Statement of Operations. |
17
Notes to Financial Statements — (continued)
October 31, 2009
(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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.34 | % | 1.23 | % | 1.21 | % | 1.25 | % | 1.28 | % | ||||||||||
Class B Shares | 2.10 | 2.00 | 1.98 | 2.01 | 2.06 | |||||||||||||||
Class C Shares | 1.99 | 1.91 | 1.90 | 1.93 | 1.97 | |||||||||||||||
Class I Shares | 1.02 | * | ||||||||||||||||||
Class R3 Shares | 1.50 | † | ||||||||||||||||||
Class R4 Shares | 1.18 | † | ||||||||||||||||||
Class R5 Shares | 0.87 | † | ||||||||||||||||||
Class Y Shares | 0.79 | 0.79 | 0.78 | 0.78 | 0.81 |
* | From February 27, 2009 (commencement of operations), through October 31, 2009. | |
† | From May 29, 2009 (commencement of operations), through October 31, 2009. |
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $7,420 and contingent deferred sales charges of $136 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $117. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was in the amount of $5. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the |
18
transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $5,263 for providing such services. These fees are accrued daily and paid monthly. | |||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. 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 | 0.08 | % | 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 October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 6 | |||
Class R5 | 6 |
6. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 2,133,313 | ||
Sales Proceeds Excluding U.S. Government Obligations | 1,813,524 |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 45,416 | — | (29,365 | ) | — | 16,051 | 11,241 | 15,211 | (18,426 | ) | — | 8,026 | ||||||||||||||||||||||||||||
Amount | $ | 647,073 | $ | — | $ | (413,437 | ) | $ | — | $ | 233,636 | $ | 222,250 | $ | 326,053 | $ | (354,389 | ) | $ | — | $ | 193,914 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,885 | — | (7,483 | ) | — | (5,598 | ) | 174 | 3,713 | (7,388 | ) | — | (3,501 | ) | ||||||||||||||||||||||||||
Amount | $ | 23,439 | $ | — | $ | (90,579 | ) | $ | — | $ | (67,140 | ) | $ | 3,113 | $ | 70,283 | $ | (128,029 | ) | $ | — | $ | (54,633 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 8,741 | — | (5,262 | ) | — | 3,479 | 258 | 4,118 | (4,803 | ) | — | (427 | ) | |||||||||||||||||||||||||||
Amount | $ | 111,182 | $ | — | $ | (64,983 | ) | $ | — | $ | 46,199 | $ | 4,710 | $ | 78,620 | $ | (82,918 | ) | $ | — | $ | 412 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 7,392 | — | (519 | ) | — | 6,873 | — | — | — | — | — | |||||||||||||||||||||||||||||
Amount | $ | 114,329 | $ | — | $ | (8,447 | ) | $ | — | $ | 105,882 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 36 | — | — | — | 36 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 649 | $ | — | $ | (2 | ) | $ | — | $ | 647 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 208 | — | (17 | ) | — | 191 | — | — | — | — | — | |||||||||||||||||||||||||||||
Amount | $ | 3,447 | $ | — | $ | (315 | ) | $ | — | $ | 3,132 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 40 | — | (1 | ) | — | 39 | — | — | — | — | — | |||||||||||||||||||||||||||||
Amount | $ | 678 | $ | — | $ | (7 | ) | $ | — | $ | 671 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 7,357 | — | (3,943 | ) | — | 3,414 | 6,624 | 845 | (1,795 | ) | — | 5,674 | ||||||||||||||||||||||||||||
Amount | $ | 112,080 | $ | — | $ | (58,574 | ) | $ | — | $ | 53,506 | $ | 140,256 | $ | 19,580 | $ | (37,699 | ) | $ | — | $ | 122,137 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 2,783 | $ | 38,204 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
21
— Selected Per-Share Data (a) — | ||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 14.55 | $ | (0.02 | ) | $ | — | $ | 1.67 | $ | 1.65 | $ | — | $ | — | $ | — | $ | — | $ | 1.65 | $ | 16.20 | |||||||||||||||||||||
B | 12.81 | (0.11 | ) | — | 1.46 | 1.35 | — | — | — | — | 1.35 | 14.16 | ||||||||||||||||||||||||||||||||
C | 12.93 | (0.10 | ) | — | 1.47 | 1.37 | — | — | — | — | 1.37 | 14.30 | ||||||||||||||||||||||||||||||||
I(f) | 12.12 | (0.01 | ) | — | 4.14 | 4.13 | — | — | — | — | 4.13 | 16.25 | ||||||||||||||||||||||||||||||||
R3(i) | 15.90 | (0.05 | ) | — | 1.73 | 1.68 | — | — | — | — | 1.68 | 17.58 | ||||||||||||||||||||||||||||||||
R4(i) | 15.90 | (0.02 | ) | — | 1.72 | 1.70 | — | — | — | — | 1.70 | 17.60 | ||||||||||||||||||||||||||||||||
R5(i) | 15.90 | — | — | 1.72 | 1.72 | — | — | — | — | 1.72 | 17.62 | |||||||||||||||||||||||||||||||||
Y | 15.75 | 0.06 | — | 1.82 | 1.88 | — | — | — | — | 1.88 | 17.63 | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | 26.89 | (0.02 | ) | — | (8.25 | ) | (8.27 | ) | (0.11 | ) | (3.96 | ) | — | (4.07 | ) | (12.34 | ) | 14.55 | ||||||||||||||||||||||||||
B | 24.23 | (0.16 | ) | — | (7.30 | ) | (7.46 | ) | — | (3.96 | ) | — | (3.96 | ) | (11.42 | ) | 12.81 | |||||||||||||||||||||||||||
C | 24.40 | (0.14 | ) | — | (7.37 | ) | (7.51 | ) | — | (3.96 | ) | — | (3.96 | ) | (11.47 | ) | 12.93 | |||||||||||||||||||||||||||
Y | 28.74 | 0.08 | — | (8.91 | ) | (8.83 | ) | (0.20 | ) | (3.96 | ) | — | (4.16 | ) | (12.99 | ) | 15.75 | |||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
B | 23.35 | (0.13 | ) | 0.02 | 5.01 | 4.90 | — | (4.02 | ) | — | (4.02 | ) | 0.88 | 24.23 | ||||||||||||||||||||||||||||||
C | 23.47 | (0.11 | ) | 0.02 | 5.04 | 4.95 | — | (4.02 | ) | — | (4.02 | ) | 0.93 | 24.40 | ||||||||||||||||||||||||||||||
Y | 26.68 | 0.28 | 0.03 | 5.77 | 6.08 | — | (4.02 | ) | — | (4.02 | ) | 2.06 | 28.74 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 26.32 | (0.03 | ) | — | 3.44 | 3.41 | — | (4.42 | ) | — | (4.42 | ) | (1.01 | ) | 25.31 | |||||||||||||||||||||||||||||
B | 24.77 | (0.22 | ) | — | 3.22 | 3.00 | — | (4.42 | ) | — | (4.42 | ) | (1.42 | ) | 23.35 | |||||||||||||||||||||||||||||
C | 24.86 | (0.20 | ) | — | 3.23 | 3.03 | — | (4.42 | ) | — | (4.42 | ) | (1.39 | ) | 23.47 | |||||||||||||||||||||||||||||
Y | 27.42 | 0.08 | — | 3.60 | 3.68 | — | (4.42 | ) | — | (4.42 | ) | (0.74 | ) | 26.68 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 22.61 | (0.05 | ) | — | 4.24 | 4.19 | — | (0.48 | ) | — | (0.48 | ) | 3.71 | 26.32 | ||||||||||||||||||||||||||||||
B | 21.47 | (0.24 | ) | — | 4.02 | 3.78 | — | (0.48 | ) | — | (0.48 | ) | 3.30 | 24.77 | ||||||||||||||||||||||||||||||
C | 21.52 | (0.22 | ) | — | 4.04 | 3.82 | — | (0.48 | ) | — | (0.48 | ) | 3.34 | 24.86 | ||||||||||||||||||||||||||||||
Y | 23.43 | 0.07 | — | 4.40 | 4.47 | — | (0.48 | ) | — | (0.48 | ) | 3.99 | 27.42 |
(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) | Commenced operations on February 27, 2009. | |
(g) | Not annualized. | |
(h) | Annualized. | |
(i) | Commenced operations on May 29, 2009. | |
(j) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. |
22
- Ratios and Supplemental Data - | ||||||||||||||||||||||||||||
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||
11.34 | % | $ | 1,718,214 | 1.36 | % | 1.36 | % | 1.36 | % | (0.14 | )% | 91 | % | |||||||||||||||
10.54 | 137,032 | 2.17 | 2.11 | 2.11 | (0.85 | ) | — | |||||||||||||||||||||
10.60 | 353,413 | 2.01 | 2.01 | 2.01 | (0.80 | ) | — | |||||||||||||||||||||
34.08 | (g) | 111,661 | 1.03 | (h) | 1.03 | (h) | 1.03 | (h) | (0.07 | ) (h) | — | |||||||||||||||||
10.57 | (g) | 638 | 1.50 | (h) | 1.50 | (h) | 1.50 | (h) | (0.70 | ) (h) | — | |||||||||||||||||
10.69 | (g) | 3,354 | 1.18 | (h) | 1.18 | (h) | 1.18 | (h) | (0.28 | ) (h) | — | |||||||||||||||||
10.82 | (g) | 693 | 0.88 | (h) | 0.88 | (h) | 0.88 | (h) | (0.01 | ) (h) | — | |||||||||||||||||
11.94 | 242,996 | 0.81 | 0.81 | 0.81 | 0.39 | — | ||||||||||||||||||||||
(35.56 | ) | 1,310,085 | 1.23 | 1.23 | 1.23 | (0.09 | ) | 94 | ||||||||||||||||||||
(36.07 | ) | 195,738 | 2.01 | 2.01 | 2.01 | (0.86 | ) | — | ||||||||||||||||||||
(36.01 | ) | 274,583 | 1.92 | 1.92 | 1.92 | (0.77 | ) | — | ||||||||||||||||||||
(35.28 | ) | 163,339 | 0.79 | 0.79 | 0.79 | 0.36 | — | |||||||||||||||||||||
25.96 | (j) | 2,205,026 | 1.22 | 1.22 | 1.22 | 0.20 | 76 | |||||||||||||||||||||
24.98 | (j) | 454,927 | 1.99 | 1.99 | 1.99 | (0.52 | ) | — | ||||||||||||||||||||
25.08 | (j) | 528,342 | 1.91 | 1.91 | 1.91 | (0.44 | ) | — | ||||||||||||||||||||
26.50 | (j) | 134,914 | 0.79 | 0.79 | 0.79 | 0.73 | — | |||||||||||||||||||||
14.84 | 1,837,361 | 1.27 | 1.27 | 1.27 | (0.13 | ) | 84 | |||||||||||||||||||||
13.97 | 449,488 | 2.04 | 2.04 | 2.04 | (0.90 | ) | — | |||||||||||||||||||||
14.06 | 499,039 | 1.96 | 1.96 | 1.96 | (0.82 | ) | — | |||||||||||||||||||||
15.31 | 184,149 | 0.81 | 0.81 | 0.81 | 0.33 | — | ||||||||||||||||||||||
18.85 | 1,677,327 | 1.30 | 1.30 | 1.30 | (0.20 | ) | 74 | |||||||||||||||||||||
17.92 | 464,175 | 2.08 | 2.08 | 2.08 | (0.98 | ) | — | |||||||||||||||||||||
18.07 | 499,502 | 1.99 | 1.99 | 1.99 | (0.89 | ) | — | |||||||||||||||||||||
19.40 | 139,273 | 0.83 | 0.83 | 0.83 | 0.26 | — |
23
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
24
25
Directors and Officers (Unaudited) — (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
26
27
28
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,132.10 | $ | 7.31 | $ | 1,000.00 | $ | 1,018.35 | $ | 6.92 | 1.36 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,128.30 | $ | 11.16 | $ | 1,000.00 | $ | 1,014.72 | $ | 10.56 | 2.08 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,128.70 | $ | 10.62 | $ | 1,000.00 | $ | 1,015.22 | $ | 10.06 | 1.98 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,134.00 | $ | 5.54 | $ | 1,000.00 | $ | 1,020.01 | $ | 5.24 | 1.03 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,132.00 | $ | 6.70 | $ | 1,000.00 | $ | 1,014.67 | $ | 6.33 | 1.50 | 153 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,133.30 | $ | 5.28 | $ | 1,000.00 | $ | 1,016.01 | $ | 4.99 | 1.18 | 153 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,134.60 | $ | 3.94 | $ | 1,000.00 | $ | 1,017.27 | $ | 3.72 | 0.88 | 153 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,135.20 | $ | 4.25 | $ | 1,000.00 | $ | 1,021.22 | $ | 4.02 | 0.79 | 184 | 365 |
29
30
31
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
32
33
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford MidCap Growth Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
22 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 | ||||
29 | ||||
30 |
The Hartford MidCap Growth Fund inception 01/01/2005 | ||
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks long-term capital appreciation. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
MidCap Growth A# | 24.01 | % | -2.09 | % | ||||
MidCap Growth A## | 17.19 | % | -3.23 | % | ||||
MidCap Growth B# | 23.43 | % | -2.62 | % | ||||
MidCap Growth B## | 18.43 | % | -2.95 | % | ||||
MidCap Growth C# | 23.04 | % | -2.77 | % | ||||
MidCap Growth C## | 22.04 | % | -2.77 | % | ||||
MidCap Growth Y# | 24.23 | % | -1.73 | % | ||||
Russell MidCap Growth Index | 22.48 | % | 0.26 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||
Hugh Whelan, CFA | Paul Bukowski, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Capital Goods (Industrials) | 11.7 | % | ||
Commercial & Professional Services (Industrials) | 3.1 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 3.2 | |||
Consumer Services (Consumer Discretionary) | 3.1 | |||
Diversified Financials (Financials) | 8.1 | |||
Energy (Energy) | 5.3 | |||
Food, Beverage & Tobacco (Consumer Staples) | 5.3 | |||
Health Care Equipment & Services (Health Care) | 8.4 | |||
Household & Personal Products (Consumer Staples) | 1.0 | |||
Insurance (Financials) | 1.8 | |||
Materials (Materials) | 5.9 | |||
Media (Consumer Discretionary) | 2.3 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 3.0 | |||
Real Estate (Financials) | 1.1 | |||
Retailing (Consumer Discretionary) | 9.0 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 6.1 | |||
Software & Services (Information Technology) | 10.9 | |||
Technology Hardware & Equipment (Information Technology) | 6.5 | |||
Telecommunication Services (Services) | 1.3 | |||
Transportation (Industrials) | 1.1 | |||
Utilities (Utilities) | 1.4 | |||
Short-Term Investments | 0.3 | |||
Other Assets and Liabilities | 0.1 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 99.6% | ||||||||
Capital Goods - 11.7% | ||||||||
3 | Alliant Techsystems, Inc. • | $ | 202 | |||||
5 | Armstrong World Industries, Inc. • | 201 | ||||||
4 | Carlisle Cos., Inc. | 130 | ||||||
2 | Cummins, Inc. | 101 | ||||||
10 | Donaldson Co., Inc. | 371 | ||||||
2 | Flowserve Corp. | 226 | ||||||
6 | Fluor Corp. | 275 | ||||||
6 | Graco, Inc. | 161 | ||||||
4 | Harsco Corp. | 124 | ||||||
6 | Jacobs Engineering Group, Inc.• | 233 | ||||||
2 | Joy Global, Inc. | 119 | ||||||
21 | Masco Corp. | 243 | ||||||
7 | McDermott International, Inc. • | 147 | ||||||
8 | Owens Corning, Inc. • | 173 | ||||||
3 | Precision Castparts Corp. | 275 | ||||||
2 | Roper Industries, Inc. | 106 | ||||||
8 | Shaw Group, Inc. • | 200 | ||||||
5 | Sunpower Corp. • | 130 | ||||||
5 | Thomas & Betts Corp. • | 154 | ||||||
6 | Toro Co. | 207 | ||||||
2 | TransDigm Group, Inc. | 96 | ||||||
5 | URS Corp. • | 187 | ||||||
2 | W.W. Grainger, Inc. | 150 | ||||||
4,211 | ||||||||
Commercial & Professional Services - 3.1% | ||||||||
4 | Copart, Inc. • | 143 | ||||||
3 | Dun & Bradstreet Corp. | 227 | ||||||
4 | Equifax, Inc. • | 112 | ||||||
2 | FTI Consulting, Inc. • | 88 | ||||||
6 | Iron Mountain, Inc. • | 156 | ||||||
19 | R.R. Donnelley & Sons Co. | 388 | ||||||
1,114 | ||||||||
Consumer Durables & Apparel - 3.2% | ||||||||
11 | Coach, Inc. | 361 | ||||||
6 | Garmin Ltd. | 184 | ||||||
5 | Mattel, Inc. | 102 | ||||||
6 | MDC Holdings, Inc. | 199 | ||||||
2 | Polo Ralph Lauren Corp. | 120 | ||||||
22 | Pulte Homes, Inc. | 202 | ||||||
1,168 | ||||||||
Consumer Services - 3.1% | ||||||||
4 | Apollo Group, Inc. Class A • | 239 | ||||||
3 | Darden Restaurants, Inc. | 80 | ||||||
7 | H & R Block, Inc. | 125 | ||||||
11 | International Game Technology | 195 | ||||||
5 | Marriott International, Inc. Class A | 131 | ||||||
12 | MGM Mirage, Inc. • | 114 | ||||||
1 | Strayer Education, Inc. | 112 | ||||||
3 | WMS Industries, Inc. • | 126 | ||||||
1,122 | ||||||||
Diversified Financials - 8.1% | ||||||||
7 | Eaton Vance Corp. | 200 | ||||||
7 | Federated Investors, Inc. | 171 | ||||||
2 | IntercontinentalExchange, Inc. • | 164 | ||||||
5 | Invesco Ltd. | 110 | ||||||
12 | Janus Capital Group, Inc. | 152 | ||||||
5 | Jefferies Group, Inc. | 125 | ||||||
3 | Lazard Ltd. | 119 | ||||||
18 | Moody’s Corp. | 433 | ||||||
13 | MSCI, Inc. • | 401 | ||||||
9 | SEI Investments Co. | 159 | ||||||
8 | T. Rowe Price Group, Inc. | 368 | ||||||
15 | TD Ameritrade Holding Corp. • | 290 | ||||||
9 | Waddell and Reed Financial, Inc. Class A | 260 | ||||||
2,952 | ||||||||
Energy - 5.3% | ||||||||
8 | Cameron International Corp. • | 294 | ||||||
4 | Consol Energy, Inc. | 177 | ||||||
1 | Diamond Offshore Drilling, Inc. | 120 | ||||||
7 | Exterran Holdings, Inc. • | 151 | ||||||
5 | Helmerich & Payne, Inc. | 205 | ||||||
10 | Massey Energy Co. | 297 | ||||||
2 | Oceaneering International, Inc. • | 105 | ||||||
10 | Patterson-UTI Energy, Inc. | 150 | ||||||
5 | Pride International, Inc. • | 146 | ||||||
5 | Rowan Companies, Inc. | 121 | ||||||
14 | Tesoro Corp. | 198 | ||||||
1,964 | ||||||||
Food, Beverage & Tobacco - 5.3% | ||||||||
4 | Brown-Forman Corp. | 175 | ||||||
6 | Campbell Soup Co. | 192 | ||||||
7 | Coca-Cola Enterprises, Inc. | 134 | ||||||
14 | Dean Foods Co. • | 258 | ||||||
11 | H.J. Heinz Co. | 424 | ||||||
4 | Hansen National Corp.• | 148 | ||||||
4 | Hershey Co. | 163 | ||||||
3 | Hormel Foods Corp. | 118 | ||||||
4 | Lorillard, Inc. | 308 | ||||||
1,920 | ||||||||
Health Care Equipment & Services - 8.4% | ||||||||
4 | Bard (C.R.), Inc. | 326 | ||||||
2 | Cerner Corp. • | 135 | ||||||
7 | CIGNA Corp. | 203 | ||||||
14 | Coventry Health Care, Inc. • | 278 | ||||||
4 | Henry Schein, Inc. • | 203 | ||||||
5 | Hospira, Inc. • | 228 | ||||||
9 | Humana, Inc. • | 327 | ||||||
— | Intuitive Surgical, Inc. • | 118 | ||||||
3 | Kinetic Concepts, Inc.• | 93 | ||||||
6 | Laboratory Corp. of America Holdings • | 426 | ||||||
9 | Omnicare, Inc. | 184 | ||||||
4 | Quest Diagnostics, Inc. | 246 | ||||||
31 | Tenet Healthcare Corp. • | 156 | ||||||
3 | Varian Medical Systems, Inc. • | 129 | ||||||
3,052 | ||||||||
Household & Personal Products - 1.0% | ||||||||
7 | Avon Products, Inc. | 237 | ||||||
4 | Herbalife Ltd. | 130 | ||||||
367 | ||||||||
4
Shares or Principal Amount | Market Value ╪ | |||||||
Insurance - 1.8% | ||||||||
6 | Arthur J. Gallagher & Co. | 130 | ||||||
5 | Marsh & McLennan Cos., Inc. | 117 | ||||||
13 | Principal Financial Group, Inc. | 325 | ||||||
6 | Progressive Corp. | 90 | ||||||
662 | ||||||||
COMMON STOCKS - 99.6% — (continued) | ||||||||
Materials - 5.9% | ||||||||
13 | Ashland, Inc. | $ | 440 | |||||
7 | Cliff’s Natural Resources, Inc. | 258 | ||||||
3 | Lubrizol Corp. | 200 | ||||||
11 | Owens-Illinois, Inc. • | 338 | ||||||
7 | Pactiv Corp. • | 159 | ||||||
6 | Schnitzer Steel Industries, Inc. | 255 | ||||||
4 | Terra Industries, Inc. | 124 | ||||||
6 | Walter Energy, Inc. | 354 | ||||||
2,128 | ||||||||
Media - 2.3% | ||||||||
9 | Discovery Communications, Inc. • | 226 | ||||||
4 | Marvel Entertainment, Inc. • | 195 | ||||||
10 | McGraw-Hill Cos., Inc. | 277 | ||||||
4 | Scripps Networks Interactive Class A | 155 | ||||||
853 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 3.0% | ||||||||
1 | Mettler-Toledo International, Inc. • | 101 | ||||||
2 | Millipore Corp. • | 101 | ||||||
10 | Mylan, Inc. • | 156 | ||||||
5 | OSI Pharmaceuticals, Inc. • | 163 | ||||||
15 | Valeant Pharmaceuticals International • | 438 | ||||||
3 | Waters Corp. • | 151 | ||||||
1,110 | ||||||||
Real Estate - 1.1% | ||||||||
6 | Plum Creek Timber Co., Inc. | 176 | ||||||
3 | Public Storage | 222 | ||||||
398 | ||||||||
Retailing - 9.0% | ||||||||
2 | Advance Automotive Parts, Inc. | 89 | ||||||
12 | Aeropostale, Inc. • | 458 | ||||||
1 | AutoZone, Inc. • | 94 | ||||||
7 | Bed Bath & Beyond, Inc. • | 248 | ||||||
14 | Chico’s FAS, Inc. • | 171 | ||||||
2 | Dollar Tree, Inc. • | 99 | ||||||
9 | Expedia, Inc. • | 193 | ||||||
3 | Guess?, Inc. | 110 | ||||||
9 | Limited Brands, Inc. | 156 | ||||||
5 | LKQ Corp. • | 90 | ||||||
4 | Netflix, Inc. • | 232 | ||||||
5 | Nordstrom, Inc. | 169 | ||||||
16 | Office Depot, Inc. • | 95 | ||||||
2 | Priceline.com, Inc. • | 309 | ||||||
8 | Ross Stores, Inc. | 352 | ||||||
2 | Sherwin-Williams Co. | 140 | ||||||
3 | Tiffany & Co. | 114 | ||||||
6 | TJX Cos., Inc. | 208 | ||||||
3,327 | ||||||||
Semiconductors & Semiconductor Equipment - 6.1% | ||||||||
11 | Altera Corp. | 213 | ||||||
34 | Cypress Semiconductor Corp. • | 290 | ||||||
13 | Linear Technology Corp. | 335 | ||||||
21 | Marvell Technology Group Ltd. • | 287 | ||||||
20 | National Semiconductor Corp. | 257 | ||||||
45 | NVIDIA Corp. • | 535 | ||||||
4 | Varian Semiconductor Equipment Associates, Inc. • | 124 | ||||||
8 | Xilinx, Inc. | 184 | ||||||
2,225 | ||||||||
Software & Services - 10.9% | ||||||||
2 | Alliance Data Systems Corp. • | 118 | ||||||
10 | Autodesk, Inc. • | 244 | ||||||
6 | BMC Software, Inc. • | 229 | ||||||
5 | Broadridge Financial Solutions, Inc. | 106 | ||||||
13 | CA, Inc. | 270 | ||||||
6 | Citrix Systems, Inc. • | 222 | ||||||
2 | Factset Research Systems, Inc. | 158 | ||||||
12 | Fidelity National Information Services, Inc. | 267 | ||||||
3 | Fiserv, Inc. • | 154 | ||||||
2 | Global Payments, Inc. | 113 | ||||||
8 | Intuit, Inc. • | 241 | ||||||
4 | Lender Processing Services | 157 | ||||||
49 | Novell, Inc. • | 201 | ||||||
11 | Paychex, Inc. | 326 | ||||||
18 | Red Hat, Inc. • | 470 | ||||||
3 | Salesforce.com, Inc. • | 192 | ||||||
9 | Synopsys, Inc. • | 187 | ||||||
6 | Total System Services, Inc. | 90 | ||||||
10 | VeriSign, Inc. • | 220 | ||||||
3,965 | ||||||||
Technology Hardware & Equipment - 6.5% | ||||||||
3 | Diebold, Inc. | 91 | ||||||
2 | Dolby Laboratories, Inc. Class A • | 103 | ||||||
6 | F5 Networks, Inc. • | 287 | ||||||
6 | FLIR Systems, Inc. • | 153 | ||||||
17 | NCR Corp. • | 171 | ||||||
13 | NetApp, Inc. • | 345 | ||||||
12 | QLogic Corp. • | 212 | ||||||
8 | SanDisk Corp. • | 172 | ||||||
15 | Seagate Technology | 211 | ||||||
12 | Teradata Corp. • | 321 | ||||||
4 | Western Digital Corp. • | 149 | ||||||
6 | Zebra Technologies Corp. Class A • | 150 | ||||||
2,365 | ||||||||
Telecommunication Services - 1.3% | ||||||||
4 | Crown Castle International Corp. • | 109 | ||||||
4 | NII Holdings, Inc. Class B • | 105 | ||||||
10 | SBA Communications Corp. • | 277 | ||||||
491 | ||||||||
Transportation - 1.1% | ||||||||
4 | C.H. Robinson Worldwide, Inc. | 210 | ||||||
5 | Expeditors International of Washington, Inc. | 176 | ||||||
386 | ||||||||
Utilities - 1.4% | ||||||||
22 | AES Corp. • | 287 | ||||||
10 | Calpine Corp. • | 114 | ||||||
3 | Constellation Energy Group, Inc. | 99 | ||||||
500 | ||||||||
Total common stocks (cost $32,398) | $ | 36,280 | ||||||
Total long-term investments (cost $32,398) | $ | 36,280 | ||||||
5
October 31, 2009
(000’s Omitted
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS - 0.3% | ||||||||||||
Repurchase Agreements - 0.1% | ||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 11/02/2009 in the amount of $27, collateralized by U.S. Treasury Bond 5.25% - 7.88%, 2021 - 2029, value of $28) | ||||||||||||
$ | 27 | 0.06%, 10/30/2009 | $ | 27 | ||||||||
RBS Greenwich Capital Markets TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $14, collateralized by U.S. Treasury Bond 5.00%, 2037, U.S. Treasury Note 3.13% - 4.63%, 2013 - 2017, value of $14) | ||||||||||||
14 | 0.06%, 10/30/2009 | 14 | ||||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 11/02/2009 in the amount of $12, collateralized by U.S. Treasury Note 1.50%, 2010, value of $13) | ||||||||||||
12 | 0.04%, 10/30/2009 | 12 | ||||||||||
53 | ||||||||||||
U.S. Treasury Bills - 0.2% | ||||||||||||
65 | 0.07%, 1/14/2010o | 65 | ||||||||||
Total short-term investments (cost $118) | $ | 118 | ||||||||||
Total investments (cost $32,516)5 | 99 .9 | % | $ | 36,398 | ||||||||
Other assets and liabilities | 0 .1 | % | 45 | |||||||||
Total net assets | 100.0 | % | $ | 36,443 | ||||||||
Note: Percentage of investments as shown is the ratio of the total market value to total net assets. |
5 | At October 31, 2009, the cost of securities for federal income tax purposes was $33,713 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 4,643 | ||
Unrealized Depreciation | (1,958 | ) | ||
Net Unrealized Appreciation | $ | 2,685 | ||
• | Currently non-income producing. | |
o | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
6
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 36,280 | $ | 36,280 | $ | — | $ | — | ||||||||
Short-Term Investments | 118 | — | 118 | — | ||||||||||||
Total | $ | 36,398 | $ | 36,280 | $ | 118 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. |
7
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $32,516) | $ | 36,398 | ||
Cash | — | |||
Receivables: | ||||
Investment securities sold | 56 | |||
Fund shares sold | 136 | |||
Dividends and interest | 17 | |||
Other assets | 42 | |||
Total assets | 36,649 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 175 | |||
Investment management fees | 5 | |||
Distribution fees | 2 | |||
Accrued expenses | 24 | |||
Total liabilities | 206 | |||
Net assets | $ | 36,443 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 49,814 | |||
Accumulated undistributed net investment income | — | |||
Accumulated net realized loss on investments | (17,253 | ) | ||
Unrealized appreciation of investments | 3,882 | |||
Net assets | $ | 36,443 | ||
Shares authorized | 800,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.49/$7.93 | ||
Shares outstanding | 3,367 | |||
Net assets | $ | 25,208 | ||
Class B: Net asset value per share | $ | 7.27 | ||
Shares outstanding | 467 | |||
Net assets | $ | 3,396 | ||
Class C: Net asset value per share | $ | 7.21 | ||
Shares outstanding | 801 | |||
Net assets | $ | 5,778 | ||
Class Y: Net asset value per share | $ | 7.64 | ||
Shares outstanding | 270 | |||
Net assets | $ | 2,061 | ||
8
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 314 | ||
Interest | 1 | |||
Securities lending | 9 | |||
Less: Foreign tax withheld | — | |||
Total investment income | 324 | |||
Expenses: | ||||
Investment management fees | 197 | |||
Transfer agent fees | 126 | |||
Distribution fees | ||||
Class A | 47 | |||
Class B | 28 | |||
Class C | 41 | |||
Custodian fees | 14 | |||
Accounting services fees | 3 | |||
Registration and filing fees | 43 | |||
Board of Directors’ fees | 3 | |||
Audit fees | 6 | |||
Other expenses | 16 | |||
Total expenses (before waivers and fees paid indirectly) | 524 | |||
Expense waivers | (120 | ) | ||
Transfer agent fee waivers | (50 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (170 | ) | ||
Total expenses, net | 354 | |||
Net Investment Loss | (30 | ) | ||
Net Realized Loss on Investments and Other Financial Instruments: | ||||
Net realized loss on investments in securities | (11,650 | ) | ||
Net realized gain on futures | 792 | |||
Net Realized Loss on Investments and Other Financial Instruments | (10,858 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments: | ||||
Net unrealized appreciation of investments | 16,390 | |||
Net unrealized depreciation of futures | (18 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments | 16,372 | |||
Net Gain on Investments and Other Finanical Instruments | 5,514 | |||
Net Increase in Net Assets Resulting from Operations | $ | 5,484 | ||
9
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment loss | $ | (30 | ) | $ | (50 | ) | ||
Net realized loss on investments and other financial instruments | (10,858 | ) | (6,355 | ) | ||||
Net unrealized appreciation (depreciation) of investments and other financial instruments | 16,372 | (14,001 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 5,484 | (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 | 252 | 17,642 | * | |||||
Class B | 189 | 767 | † | |||||
Class C | 1,782 | 1,344 | ‡ | |||||
Class Y | 1,710 | 132 | § | |||||
Net increase from capital share transactions | 3,933 | 19,885 | ||||||
Net Increase (Decrease) In Net Assets | 9,417 | (4,444 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 27,026 | 31,470 | ||||||
End of period | $ | 36,443 | $ | 27,026 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | — | $ | — | ||||
* | 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. |
10
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
11
October 31, 2009
(000’s Omitted)
12
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable representation of exit price. |
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. To minimize counterparty risk, the 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 October 31, 2009. | ||
e) | 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 |
13
October 31, 2009
(000’s Omitted)
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 may use 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 October 31, 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 of the Fund are declared and paid annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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) | Additional Derivative Instrument(s) Information | ||
The volume of derivative activity was minimal during the year ended October 31, 2009. |
14
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Equity contracts | $ | — | $ | — | $ | 792 | $ | — | $ | — | $ | 792 | ||||||||||||
Total | $ | — | $ | — | $ | 792 | $ | — | $ | — | $ | 792 | ||||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Equity contracts | — | — | (18 | ) | — | — | $ | (18 | ) | |||||||||||||||
Total | $ | — | $ | — | $ | (18 | ) | $ | — | $ | — | $ | (18 | ) | ||||||||||
j) | 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: |
15
October 31, 2009
(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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | — | $ | 3,444 | ||||
Long-Term Capital Gains * | — | 479 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Accumulated Capital Losses * | $ | (16,055 | ) | |
Unrealized Appreciation † | 2,684 | |||
Total Accumulated Deficit | $ | (13,371 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
16
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase undistributed net investment income by $30, increase accumulated net realized gain on investments by $14, and decrease paid-in-capital by $44. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2015 | $ | 11 | ||
2016 | 4,493 | |||
2017 | 11,551 | |||
Total | $ | 16,055 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
5. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
17
October 31, 2009
(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 year ended October 31, 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’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 year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.21 | % | 1.35 | % | 1.36 | % | 1.48 | % | 1.49 | %* | ||||||||||
Class B Shares | 1.59 | 1.82 | 1.95 | 2.09 | 2.24 | * | ||||||||||||||
Class C Shares | 1.88 | 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. |
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $172 and contingent deferred sales charges of $11 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $9. These commissions are in turn paid to sales representatives of the broker/dealers. |
18
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $80 for providing such services. These fees are accrued daily and paid monthly. |
6. | Investment Transactions: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 50,248 | ||
Sales Proceeds Excluding U.S. Government Obligations | 45,429 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 2,017 | — | (2,176 | ) | — | (159 | ) | 808 | 248 | (687 | ) | 1,423 | 1,792 | |||||||||||||||||||||||||||
Amount | $ | 12,998 | $ | — | $ | (12,746 | ) | $ | — | $ | 252 | $ | 7,212 | $ | 2,583 | $ | (6,080 | ) | $ | 13,927 | $ | 17,642 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 189 | — | (161 | ) | — | 28 | 112 | 53 | (149 | ) | 62 | 78 | ||||||||||||||||||||||||||||
Amount | $ | 1,168 | $ | — | $ | (979 | ) | $ | — | $ | 189 | $ | 984 | $ | 542 | $ | (1,351 | ) | $ | 592 | $ | 767 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 624 | — | (336 | ) | — | 288 | 173 | 52 | (215 | ) | 120 | 130 | ||||||||||||||||||||||||||||
Amount | $ | 3,851 | $ | — | $ | (2,069 | ) | $ | — | $ | 1,782 | $ | 1,566 | $ | 522 | $ | (1,891 | ) | $ | 1,147 | $ | 1,344 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 270 | — | (22 | ) | — | 248 | — | 1 | — | 12 | 13 | |||||||||||||||||||||||||||||
Amount | $ | 1,889 | $ | — | $ | (179 | ) | $ | — | $ | 1,710 | $ | — | $ | 14 | $ | — | $ | 118 | $ | 132 |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 18 | $ | 113 | |||||
For the Year Ended October 31, 2008 | 11 | $ | 100 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. |
19
October 31, 2009
(000’s Omitted)
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. | ||
10. | Subsequent Events: | |
At a meeting held on November 5, 2009, the Board of Directors of The Hartford Mutual Funds, Inc. approved a Form of Agreement and Plan of Reorganization that provides for the tax-free reorganization of The Hartford Select MidCap Value Fund, a series of the Company, into the Fund. The reorganization does not require shareholder approval. The reorganization is expected to occur on or about February 19, 2010 or on such date as the officers of the Company determine. | ||
Effective as of the close of business on December 11, 2009, in anticipation of the reorganization, shares of Classes A, B, C, and Y of The Hartford Select MidCap Value 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. | ||
At the same Board meeting, the Board also approved a change to the name of the Fund to The Hartford Small/Mid Cap Equity Fund. In connection with this change, effective February 1, 2010, prior to the Closing Date, the Fund’s principal investment strategy will be revised. | ||
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
20
21
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.04 | $ | — | $ | — | $ | 1.45 | $ | 1.45 | $ | — | $ | — | $ | — | $ | — | $ | 1.45 | $ | 7.49 | ||||||||||||||||||||||
B | 5.89 | (0 .02 | ) | — | 1.40 | 1.38 | — | — | — | — | 1.38 | 7.27 | ||||||||||||||||||||||||||||||||
C | 5.86 | (0 .04 | ) | — | 1.39 | 1.35 | — | — | — | — | 1.35 | 7.21 | ||||||||||||||||||||||||||||||||
Y | 6.15 | 0.01 | — | 1.48 | 1.49 | — | — | — | — | 1.49 | 7.64 | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 12.73 | — | — | (5.11 | ) | (5.11 | ) | — | (1.58 | ) | — | (1.58 | ) | (6.69 | ) | 6.04 | ||||||||||||||||||||||||||||
B | 12.50 | (0 .06 | ) | — | (4.97 | ) | (5.03 | ) | — | (1.58 | ) | — | (1.58 | ) | (6.61 | ) | 5.89 | |||||||||||||||||||||||||||
C | 12.46 | (0 .08 | ) | — | (4.94 | ) | (5.02 | ) | — | (1.58 | ) | — | (1.58 | ) | (6.60 | ) | 5.86 | |||||||||||||||||||||||||||
Y | 12.88 | 0.05 | — | (5.20 | ) | (5.15 | ) | — | (1.58 | ) | — | (1.58 | ) | (6.73 | ) | 6.15 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 11.28 | (0 .05 | ) | — | 1.98 | 1.93 | — | (0.48 | ) | — | (0.48 | ) | 1.45 | 12.73 | ||||||||||||||||||||||||||||||
B | 11.14 | (0 .11 | ) | — | 1.95 | 1.84 | — | (0.48 | ) | — | (0.48 | ) | 1.36 | 12.50 | ||||||||||||||||||||||||||||||
C | 11.13 | (0 .13 | ) | — | 1.94 | 1.81 | — | (0.48 | ) | — | (0.48 | ) | 1.33 | 12.46 | ||||||||||||||||||||||||||||||
Y | 11.36 | (0 .57 | ) | — | 2.57 | 2.00 | — | (0.48 | ) | — | (0.48 | ) | 1.52 | 12.88 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.14 | (0 .08 | ) | — | 1.32 | 1.24 | — | (0.10 | ) | — | (0.10 | ) | 1.14 | 11.28 | ||||||||||||||||||||||||||||||
B | 10.08 | (0 .15 | ) | — | 1.31 | 1.16 | — | (0.10 | ) | — | (0.10 | ) | 1.06 | 11.14 | ||||||||||||||||||||||||||||||
C | 10.08 | (0 .15 | ) | — | 1.30 | 1.15 | — | (0.10 | ) | — | (0.10 | ) | 1.05 | 11.13 | ||||||||||||||||||||||||||||||
Y | 10.17 | (0 .04 | ) | — | 1.33 | 1.29 | — | (0.10 | ) | — | (0.10 | ) | 1.19 | 11.36 | ||||||||||||||||||||||||||||||
From (commencement of operations) January 1, 2005, through October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A(f) | 10.06 | (0 .06 | ) | — | 0.14 | 0.08 | — | — | — | — | 0.08 | 10.14 | ||||||||||||||||||||||||||||||||
B(f) | 10.06 | (0 .09 | ) | — | 0.11 | 0.02 | — | — | — | — | 0.02 | 10.08 | ||||||||||||||||||||||||||||||||
C(f) | 10.06 | (0 .09 | ) | — | 0.11 | 0.02 | — | — | — | — | 0.02 | 10.08 | ||||||||||||||||||||||||||||||||
Y(f) | 10.06 | (0 .05 | ) | — | 0.16 | 0.11 | — | — | — | — | 0.11 | 10.17 |
(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) | Commenced operations on January 1, 2005. | |
(g) | Not annualized. | |
(h) | Annualized. |
22
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||
Net Assets at End | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio | |||||||||||||||||||
Total Return(b) | of Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Turnover Rate(d) | ||||||||||||||||||
24.01% | $ | 25,208 | 1.76 | % | 1.21 | % | 1.21 | % | 0.03 | % | 172 | % | ||||||||||||
23.43 | 3,396 | 2.89 | 1.59 | 1.59 | (0.37 | ) | — | |||||||||||||||||
23.04 | 5,778 | 2.59 | 1.88 | 1.88 | (0.67 | ) | — | |||||||||||||||||
24.23 | 2,061 | 1.01 | 0.95 | 0.95 | 0.18 | — | ||||||||||||||||||
(45.38) | 21,304 | 1.50 | 1.35 | 1.35 | 0.05 | 292 | ||||||||||||||||||
(45.59) | 2,584 | 2.56 | 1.82 | 1.82 | (0.63 | ) | — | |||||||||||||||||
(45.67) | 3,002 | 2.39 | 1.99 | 1.99 | (0.89 | ) | — | |||||||||||||||||
(45.12) | 136 | 0.98 | 0.95 | 0.95 | 0.67 | — | ||||||||||||||||||
17.76 | 22,074 | 1.60 | 1.37 | 1.37 | (0.43 | ) | 186 | |||||||||||||||||
17.15 | 4,509 | 2.55 | 1.96 | 1.96 | (1.01 | ) | — | |||||||||||||||||
16.89 | 4,772 | 2.40 | 2.12 | 2.12 | (1.17 | ) | — | |||||||||||||||||
18.28 | 115 | 1.11 | 1.03 | 1.03 | (0.44 | ) | — | |||||||||||||||||
12.31 | 23,542 | 1.69 | 1.50 | 1.50 | (0.85 | ) | 99 | |||||||||||||||||
11.58 | 3,725 | 2.67 | 2.11 | 2.11 | (1.46 | ) | — | |||||||||||||||||
11.48 | 3,861 | 2.52 | 2.26 | 2.26 | (1.60 | ) | — | |||||||||||||||||
12.77 | 28,868 | 1.13 | 1.11 | 1.11 | (0.45 | ) | — | |||||||||||||||||
0.80 (g) | 14,995 | 2.22 | (h) | 1.50 | (h) | 1.50 | (h) | (0.95 | ) (h) | 97 | ||||||||||||||
0.20 (g) | 2,354 | 3.35 | (h) | 2.25 | (h) | 2.25 | (h) | (1.70 | ) (h) | — | ||||||||||||||
0.20 (g) | 1,741 | 3.26 | (h) | 2.25 | (h) | 2.25 | (h) | (1.70 | ) (h) | — | ||||||||||||||
1.09 (g) | 210 | 1.66 | (h) | 1.10 | (h) | 1.10 | (h) | (0.55 | ) (h) | — |
23
The Hartford Mutual Funds, Inc.
December 15, 2009
24
25
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 - 2009). |
26
27
28
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,194.60 | $ | 6.86 | $ | 1,000.00 | $ | 1,018.95 | $ | 6.31 | 1.24 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,191.80 | $ | 9.34 | $ | 1,000.00 | $ | 1,016.69 | $ | 8.59 | 1.69 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,189.80 | $ | 10.71 | $ | 1,000.00 | $ | 1,015.43 | $ | 9.86 | 1.94 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,197.50 | $ | 5.26 | $ | 1,000.00 | $ | 1,020.42 | $ | 4.84 | 0.95 | 184 | 365 |
29
30
31
32
THE HARTFORD MUTUAL FUND 2009 Annual Report The Hartford MidCap Value Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
20 | ||||
22 | ||||
23 | ||||
25 | ||||
25 | ||||
26 | ||||
27 | ||||
28 |
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
MidCap Value A# | 28.63 | % | 1.74 | % | 4.08 | % | ||||||
MidCap Value A## | 21.56 | % | 0.59 | % | 3.39 | % | ||||||
MidCap Value B# | 28.03 | % | 1.03 | % | NA | * | ||||||
MidCap Value B## | 23.03 | % | 0.80 | % | NA | * | ||||||
MidCap Value C# | 27.69 | % | 0.97 | % | 3.33 | % | ||||||
MidCap Value C## | 26.69 | % | 0.97 | % | 3.33 | % | ||||||
MidCap Value Y# | 29.08 | % | 2.16 | % | 4.54 | % | ||||||
Russell 2500 Value Index | 8.55 | % | 0.88 | % | 5.48 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
James N. Mordy
Senior Vice President, Partner
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 0.9 | % | ||
Banks (Financials) | 2.7 | |||
Capital Goods (Industrials) | 9.6 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 5.4 | |||
Consumer Services (Consumer Discretionary) | 0.9 | |||
Diversified Financials (Financials) | 8.0 | |||
Energy (Energy) | 6.2 | |||
Food, Beverage & Tobacco (Consumer Staples) | 3.4 | |||
Health Care Equipment & Services (Health Care) | 3.6 | |||
Insurance (Financials) | 10.4 | |||
Materials (Materials) | 9.4 | |||
Media (Consumer Discretionary) | 2.7 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 4.0 | |||
Real Estate (Financials) | 4.0 | |||
Retailing (Consumer Discretionary) | 4.3 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 3.9 | |||
Software & Services (Information Technology) | 1.7 | |||
Technology Hardware & Equipment (Information Technology) | 8.2 | |||
Transportation (Industrials) | 2.9 | |||
Utilities (Utilities) | 6.4 | |||
Short-Term Investments | 1.3 | |||
Other Assets and Liabilities | 0.1 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 98.6% | ||||||||
Automobiles & Components — 0.9% | ||||||||
105 | TRW Automotive Holdings Corp. • | $ | 1,640 | |||||
Banks — 2.7% | ||||||||
34 | Beneficial Mutual Bancorp, Inc. • | 315 | ||||||
53 | Comerica, Inc. | 1,482 | ||||||
290 | Huntington Bancshares, Inc. | 1,105 | ||||||
452 | Popular, Inc. | 977 | ||||||
50 | SunTrust Banks, Inc. | 957 | ||||||
4,836 | ||||||||
Capital Goods — 9.6% | ||||||||
61 | AMETEK, Inc. | 2,132 | ||||||
92 | Barnes Group, Inc. | 1,453 | ||||||
37 | Dover Corp. | 1,409 | ||||||
78 | Kennametal, Inc. | 1,847 | ||||||
107 | Pentair, Inc. | 3,114 | ||||||
45 | Teledyne Technologies, Inc. • | 1,534 | ||||||
64 | Terex Corp. • | 1,284 | ||||||
93 | Textron, Inc. | 1,659 | ||||||
49 | Thomas & Betts Corp. • | 1,659 | ||||||
36 | URS Corp. • | 1,387 | ||||||
17,478 | ||||||||
Consumer Durables & Apparel — 5.4% | ||||||||
95 | Mattel, Inc. | 1,804 | ||||||
115 | MDC Holdings, Inc. | 3,741 | ||||||
113 | Toll Brothers, Inc. • | 1,959 | ||||||
32 | V.F. Corp. | 2,273 | ||||||
9,777 | ||||||||
Consumer Services — 0.9% | ||||||||
501 | Thomas Cook Group plc | 1,678 | ||||||
Diversified Financials — 8.0% | ||||||||
29 | Affiliated Managers Group, Inc. • | 1,823 | ||||||
101 | Ameriprise Financial, Inc. | 3,505 | ||||||
112 | Invesco Ltd. | 2,375 | ||||||
269 | PHH Corp. • | 4,341 | ||||||
124 | TD Ameritrade Holding Corp. • | 2,391 | ||||||
14,435 | ||||||||
Energy — 6.2% | ||||||||
83 | Cie Gen Geophysique ADR • | 1,653 | ||||||
46 | Consol Energy, Inc. | 1,961 | ||||||
88 | Newfield Exploration Co. • | 3,622 | ||||||
21 | Noble Energy, Inc. | 1,404 | ||||||
56 | SBM Offshore N.V. | 1,066 | ||||||
35 | Smith International, Inc. | 959 | ||||||
25 | Weatherford International Ltd. • | 433 | ||||||
11,098 | ||||||||
Food, Beverage & Tobacco — 3.4% | ||||||||
8 | BRF Brasil Foods S.A. ADR • | 368 | ||||||
28 | Bunge Ltd. Finance Corp. | 1,586 | ||||||
1,936 | First Pacific Co., Ltd. ⌂ | 1,143 | ||||||
387 | First Pacific Co., Ltd. Rights | 62 | ||||||
69 | Marfig Frigorificos E Comer • | 786 | ||||||
589 | Marine Harvest • | 427 | ||||||
76 | Perdigao S.A. • | 1,842 | ||||||
6,214 | ||||||||
Health Care Equipment & Services — 3.6% | ||||||||
115 | Amerisource Bergen Corp. | 2,554 | ||||||
115 | CIGNA Corp. | 3,207 | ||||||
11 | Laboratory Corp. of America Holdings • | 758 | ||||||
6,519 | ||||||||
Insurance — 10.4% | ||||||||
37 | Everest Re Group Ltd. | 3,255 | ||||||
62 | Fidelity National Financial, Inc. | 840 | ||||||
31 | First American Financial Corp. | 945 | ||||||
21 | PartnerRe Ltd. | 1,598 | ||||||
76 | Platinum Underwriters Holdings Ltd. | 2,715 | ||||||
68 | Principal Financial Group, Inc. | 1,693 | ||||||
92 | Reinsurance Group of America, Inc. | 4,220 | ||||||
178 | Unum Group | 3,555 | ||||||
18,821 | ||||||||
Materials — 9.4% | ||||||||
45 | Agrium U.S., Inc. | 2,089 | ||||||
55 | Cliff’s Natural Resources, Inc. | 1,956 | ||||||
49 | Cytec Industries, Inc. | 1,609 | ||||||
56 | FMC Corp. | 2,877 | ||||||
41 | Greif, Inc. | 2,194 | ||||||
87 | Nalco Holding Co. | 1,844 | ||||||
79 | Owens-Illinois, Inc. • | 2,509 | ||||||
452 | Rexam plc | 2,046 | ||||||
17,124 | ||||||||
Media — 2.7% | ||||||||
344 | Virgin Media, Inc. | 4,809 | ||||||
Pharmaceuticals, Biotechnology & Life Sciences — 4.0% | ||||||||
46 | Endo Pharmaceuticals Holdings, Inc. • | 1,026 | ||||||
385 | Impax Laboratories, Inc. • | 3,414 | ||||||
197 | King Pharmaceuticals, Inc. • | 1,995 | ||||||
51 | Theravance, Inc. • | 707 | ||||||
7,142 | ||||||||
Real Estate — 4.0% | ||||||||
115 | BR Malls Participacoes S.A. • | 1,229 | ||||||
1,030 | Chimera Investment Corp. | 3,595 | ||||||
52 | Iguatemi Emp de Shopping | 769 | ||||||
112 | Multiplan Empreendimentos Imobiliarios S.A. | 1,692 | ||||||
7,285 | ||||||||
Retailing — 4.3% | ||||||||
108 | American Eagle Outfitters, Inc. | 1,891 | ||||||
49 | AnnTaylor Stores Corp. • | 641 | ||||||
2,375 | Buck Holdings L.P. ⌂•† | 2,976 | ||||||
52 | Ross Stores, Inc. | 2,284 | ||||||
7,792 | ||||||||
Semiconductors & Semiconductor Equipment — 3.9% | ||||||||
60 | Linear Technology Corp. | 1,540 | ||||||
180 | Teradyne, Inc. • | 1,507 | ||||||
140 | Varian Semiconductor Equipment Associates, Inc. • | 3,973 | ||||||
7,020 | ||||||||
Software & Services — 1.7% | ||||||||
49 | McAfee, Inc. • | 2,035 | ||||||
61 | Western Union Co. | 1,105 | ||||||
3,140 | ||||||||
Technology Hardware & Equipment — 8.2% | ||||||||
181 | Arrow Electronics, Inc. • | 4,591 | ||||||
346 | Flextronics International Ltd. • | 2,239 | ||||||
168 | JDS Uniphase Corp. • | 942 | ||||||
3,964 | Kingboard Laminates Holdings | 2,772 | ||||||
51 | NetApp, Inc. • | 1,388 |
4
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 98.6% — (continued) | ||||||||||||
Technology Hardware & Equipment — 8.2% — (continued) | ||||||||||||
182 | Solar Cayman Ltd. ⌂•† | $ | 1,485 | |||||||||
224 | Tellabs, Inc. • | 1,350 | ||||||||||
14,767 | ||||||||||||
Transportation — 2.9% | ||||||||||||
17 | Con-way, Inc. | 561 | ||||||||||
470 | Delta Air Lines, Inc. • | 3,352 | ||||||||||
43 | J.B. Hunt Transport Services, Inc. | 1,301 | ||||||||||
5,214 | ||||||||||||
Utilities — 6.4% | ||||||||||||
84 | Allegheny Energy, Inc. | 1,921 | ||||||||||
290 | N.V. Energy, Inc. | 3,319 | ||||||||||
114 | Northeast Utilities | 2,635 | ||||||||||
72 | UGI Corp. | 1,722 | ||||||||||
47 | Wisconsin Energy Corp. | 2,035 | ||||||||||
11,632 | ||||||||||||
Total common stocks (cost $174,448) | $ | 178,421 | ||||||||||
Total long-term investments (cost $174,448) | $ | 178,421 | ||||||||||
SHORT-TERM INVESTMENTS — 1.3% | ||||||||||||
Repurchase Agreements — 1.3% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $97, collateralized by GNMA 5.00%, 2039, value of $99) | ||||||||||||
$ | 97 | 0.08%, 10/30/2009 | $ | 97 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $569, collateralized by FHLMC 4.00% — 7.00%, 2011 — 2039, FNMA 4.00% — 7.00%, 2017 — 2047, value of $581) | ||||||||||||
569 | 0.08%, 10/30/2009 | 569 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $634, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $647) | ||||||||||||
634 | 0.08%, 10/30/2009 | 634 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $7, collateralized by U.S. Treasury Note 2.75%, 2013, value of $7) | ||||||||||||
7 | 0.05%, 10/30/2009 | 7 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,099, collateralized by FNMA 4.00% — 7.50%, 2016 — 2048, value of $1,121) | ||||||||||||
1,099 | 0.07%, 10/30/2009 | 1,099 | ||||||||||
2,406 | ||||||||||||
Total short-term investments (cost $2,406) | $ | 2,406 | ||||||||||
Total investments (cost $176,854) ▲ | 99 .9 | % | $ | 180,827 | ||||||||
Other assets and liabilities | 0 .1 | % | 270 | |||||||||
Total net assets | 100.0 | % | $ | 181,097 | ||||||||
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 10.6% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $182,745 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 19,109 | ||
Unrealized Depreciation | (21,027 | ) | ||
Net Unrealized Depreciation | $ | (1,918 | ) | |
† | 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 October 31, 2009, was $4,461, which represents 2.46% of total net assets. This amount excludes securities that are principally traded in certain foreign markets and whose prices are 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 | ||||||||
12/2007 — 04/2008 | 1,936 | First Pacific Co., Ltd. | 1,520 |
5
October 31, 2009
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
03/2007 | 182 | Solar Cayman Ltd. — 144A | $ | 2,425 |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Norwegian Krone (Sell) | $ | 33 | $ | 33 | 11/02/09 | $ | — | |||||||||
Norwegian Krone (Sell) | 149 | 151 | 11/03/09 | 2 | ||||||||||||
Norwegian Krone (Sell) | 92 | 92 | 11/04/09 | — | ||||||||||||
$ | 2 | |||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
6
October 31, 2009
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 178,421 | $ | 164,766 | $ | 9,194 | $ | 4,461 | ||||||||
Short-Term Investments | 2,406 | — | 2,406 | — | ||||||||||||
Total | $ | 180,827 | $ | 164,766 | $ | 11,600 | $ | 4,461 | ||||||||
Other Financial Instruments * | $ | 2 | $ | — | $ | 2 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | — | $ | — | $ | — | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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. |
Balance as of | Change in | Transfers In | Balance as of | |||||||||||||||||
October 31, | Unrealized | and/or Out of | October 31, | |||||||||||||||||
2008 | Appreciation | Net Sales | Level 3 | 2009 | ||||||||||||||||
Assets: | ||||||||||||||||||||
Common Stock | $ | 8,199 | $ | 153 | * | $ | (307 | ) | $ | (3,584 | ) | $ | 4,461 | |||||||
Total | $ | 8,199 | $ | 153 | $ | (307 | ) | $ | (3,584 | ) | $ | 4,461 | ||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $153. |
7
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $176,854) | $ | 180,827 | ||
Cash | — | |||
Unrealized appreciation on forward foreign currency contracts | 2 | |||
Receivables: | ||||
Investment securities sold | 1,349 | |||
Fund shares sold | 96 | |||
Dividends and interest | 51 | |||
Other assets | 35 | |||
Total assets | 182,360 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | — | |||
Bank overdraft — foreign cash | — | |||
Payables: | ||||
Investment securities purchased | 866 | |||
Fund shares redeemed | 268 | |||
Investment management fees | 25 | |||
Distribution fees | 13 | |||
Accrued expenses | 91 | |||
Total liabilities | 1,263 | |||
Net assets | $ | 181,097 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 256,356 | |||
Accumulated undistributed net investment income | 57 | |||
Accumulated net realized loss on investments and foreign currency transactions | (79,287 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 3,971 | |||
Net assets | $ | 181,097 | ||
Shares authorized | 300,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.37/ $8.86 | ||
Shares outstanding | 15,219 | |||
Net assets | $ | 127,459 | ||
Class B: Net asset value per share | $ | 7.72 | ||
Shares outstanding | 2,821 | |||
Net assets | $ | 21,782 | ||
Class C: Net asset value per share | $ | 7.70 | ||
Shares outstanding | 2,993 | |||
Net assets | $ | 23,058 | ||
Class Y: Net asset value per share | $ | 8.77 | ||
Shares outstanding | 1,003 | |||
Net assets | $ | 8,798 | ||
8
Investment Income: | ||||
Dividends | $ | 3,074 | ||
Interest | 2 | |||
Securities lending | 7 | |||
Less: Foreign tax withheld | (12 | ) | ||
Total investment income | 3,071 | |||
Expenses: | ||||
Investment management fees | 1,330 | |||
Transfer agent fees | 729 | |||
Distribution fees | ||||
Class A | 291 | |||
Class B | 221 | |||
Class C | 215 | |||
Custodian fees | 23 | |||
Accounting services fees | 23 | |||
Registration and filing fees | 45 | |||
Board of Directors’ fees | 6 | |||
Audit fees | 10 | |||
Other expenses | 72 | |||
Total expenses (before waivers and fees paid indirectly) | 2,965 | |||
Expense waivers | (423 | ) | ||
Transfer agent fee waivers | (250 | ) | ||
Commission recapture | (21 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (694 | ) | ||
Total expenses, net | 2,271 | |||
Net Investment Income | 800 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (45,717 | ) | ||
Net realized loss on forward foreign currency contracts | (52 | ) | ||
Net realized gain on other foreign currency transactions | 33 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (45,736 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 84,120 | |||
Net unrealized appreciation of forward foreign currency contracts | 2 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (4 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 84,118 | |||
Net Gain on Investments and Foreign Currency Transactions | 38,382 | |||
Net Increase in Net Assets Resulting from Operations | $ | 39,182 | ||
9
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | 800 | $ | (78 | ) | |||
Net realized loss on investments and foreign currency transactions | (45,736 | ) | (33,349 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 84,118 | (146,998 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 39,182 | (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 | (27,796 | ) | (5,633 | ) | ||||
Class B | (7,929 | ) | (1,329 | ) | ||||
Class C | (6,203 | ) | (2,633 | ) | ||||
Class Y | (396 | ) | 11,361 | |||||
Net increase (decrease) from capital share transactions | (42,324 | ) | 1,766 | |||||
Net Decrease In Net Assets | (3,632 | ) | (252,708 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 184,729 | 437,437 | ||||||
End of period | $ | 181,097 | $ | 184,729 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 57 | $ | — | ||||
10
October 31, 2009
(000’s Omitted)
1. | Organization: |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. |
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
11
October 31, 2009
(000’s Omitted)
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable representation of exit price. |
12
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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 October 31, 2009. |
13
October 31, 2009
(000’s Omitted)
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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. |
14
k) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||
Foreign exchange contracts | Unrealized appreciation on forward foreign currency contracts | $ | 2 | Unrealized depreciation on forward foreign currency contracts | $— |
The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the year ended October 31, 2009. | |||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | (52 | ) | $ | — | $ | (52 | ) | ||||||||||
Total | $ | — | $ | — | $ | — | $ | (52 | ) | $ | — | $ | (52 | ) | ||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | 2 | — | $ | 2 | |||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | 2 | $ | — | $ | 2 | ||||||||||||
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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
15
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 490 | $ | 10,962 | ||||
Long-Term Capital Gains * | — | 63,087 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 57 | ||
Accumulated Capital Losses * | (73,396 | ) | ||
Unrealized Depreciation † | (1,920 | ) | ||
Total Accumulated Deficit | $ | (75,259 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $253, increase accumulated net realized gain on investments by $311, and decrease paid-in-capital by $58. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 31,355 | ||
2017 | 42,041 | |||
Total | $ | 73,396 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. As investment manager, |
16
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 year ended October 31, 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 services 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 year ended October 31, 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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.20 | % | 1.39 | % | 1.39 | % | 1.39 | % | 1.38 | % | ||||||||||
Class B Shares | 1.76 | 2.05 | 2.15 | 2.14 | 2.13 | |||||||||||||||
Class C Shares | 2.01 | 2.14 | 2.09 | 2.14 | 2.13 | |||||||||||||||
Class Y Shares | 0.89 | 0.91 | 0.89 | 0.93 | 0.94 |
17
October 31, 2009
(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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $74 and contingent deferred sales charges of $18 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $484 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 | % | 16.71 | % | ||||
Class B | 0.01 | 15.85 | ||||||
Class C | 0.01 | 15.93 | ||||||
Class Y | 0.01 | 17.37 |
18
5. | Investment Transactions: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 86,513 | ||
Sales Proceeds Excluding U.S. Government Obligations | 129,749 |
6. | Capital Share Transactions: |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 875 | 64 | (5,325 | ) | — | (4,386 | ) | 386 | 4,447 | (6,258 | ) | — | (1,425 | ) | ||||||||||||||||||||||||||
Amount | $ | 6,905 | $ | 396 | $ | (35,097 | ) | $ | — | $ | (27,796 | ) | $ | 3,761 | $ | 50,611 | $ | (60,005 | ) | $ | — | $ | (5,633 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 34 | — | (1,246 | ) | — | (1,212 | ) | 58 | 975 | (1,371 | ) | — | (338 | ) | ||||||||||||||||||||||||||
Amount | $ | 228 | $ | — | $ | (8,157 | ) | $ | — | $ | (7,929 | ) | $ | 559 | $ | 10,316 | $ | (12,204 | ) | $ | — | $ | (1,329 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 88 | — | (1,143 | ) | — | (1,055 | ) | 54 | 979 | (1,519 | ) | — | (486 | ) | ||||||||||||||||||||||||||
Amount | $ | 661 | $ | — | $ | (6,864 | ) | $ | — | $ | (6,203 | ) | $ | 525 | $ | 10,367 | $ | (13,525 | ) | $ | — | $ | (2,633 | ) | ||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 502 | 13 | (673 | ) | — | (158 | ) | 1,236 | 27 | (229 | ) | — | 1,034 | |||||||||||||||||||||||||||
Amount | $ | 3,839 | $ | 84 | $ | (4,319 | ) | $ | — | $ | (396 | ) | $ | 13,312 | $ | 318 | $ | (2,269 | ) | $ | — | $ | 11,361 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 248 | $ | 1,962 | |||||
For the Year Ended October 31, 2008 | 108 | $ | 1,071 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. |
9. | Subsequent Events: |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
19
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.53 | $ | 0.04 | $ | — | $ | 1.82 | $ | 1.86 | $ | (0.02 | ) | $ | — | $ | — | $ | (0.02 | ) | $ | 1.84 | $ | 8.37 | ||||||||||||||||||||
B | 6.03 | 0.01 | — | 1.68 | 1.69 | — | — | — | — | 1.69 | 7.72 | |||||||||||||||||||||||||||||||||
C | 6.03 | (0.01 | ) | — | 1.68 | 1.67 | — | — | — | — | 1.67 | 7.70 | ||||||||||||||||||||||||||||||||
Y | 6.88 | 0.05 | — | 1.91 | 1.96 | (0.07 | ) | — | — | (0.07 | ) | 1.89 | 8.77 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 14.80 | 0.02 | — | (5.81 | ) | (5.79 | ) | — | (2.48 | ) | — | (2.48 | ) | (8.27 | ) | 6.53 | ||||||||||||||||||||||||||||
B | 13.95 | (0.05 | ) | — | (5.39 | ) | (5.44 | ) | — | (2.48 | ) | — | (2.48 | ) | (7.92 | ) | 6.03 | |||||||||||||||||||||||||||
C | 13.96 | (0.06 | ) | — | (5.39 | ) | (5.45 | ) | — | (2.48 | ) | — | (2.48 | ) | (7.93 | ) | 6.03 | |||||||||||||||||||||||||||
Y | 15.39 | 0.05 | — | (6.08 | ) | (6.03 | ) | — | (2.48 | ) | — | (2.48 | ) | (8.51 | ) | 6.88 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 14.57 | — | — | 2.14 | 2.14 | — | (1.91 | ) | — | (1.91 | ) | 0.23 | 14.80 | |||||||||||||||||||||||||||||||
B | 13.93 | (0.11 | ) | — | 2.04 | 1.93 | — | (1.91 | ) | — | (1.91 | ) | 0.02 | 13.95 | ||||||||||||||||||||||||||||||
C | 13.93 | (0.10 | ) | — | 2.04 | 1.94 | — | (1.91 | ) | — | (1.91 | ) | 0.03 | 13.96 | ||||||||||||||||||||||||||||||
Y | 15.00 | 0.14 | 0.02 | 2.14 | 2.30 | — | (1.91 | ) | — | (1.91 | ) | 0.39 | 15.39 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 13.29 | 0.01 | — | 2.59 | 2.60 | — | (1.32 | ) | — | (1.32 | ) | 1.28 | 14.57 | |||||||||||||||||||||||||||||||
B | 12.85 | (0.10 | ) | — | 2.50 | 2.40 | — | (1.32 | ) | — | (1.32 | ) | 1.08 | 13.93 | ||||||||||||||||||||||||||||||
C | 12.85 | (0.10 | ) | — | 2.50 | 2.40 | — | (1.32 | ) | — | (1.32 | ) | 1.08 | 13.93 | ||||||||||||||||||||||||||||||
Y | 13.59 | 0.08 | — | 2.65 | 2.73 | — | (1.32 | ) | — | (1.32 | ) | 1.41 | 15.00 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 12.89 | (0.04 | ) | — | 1.41 | 1.37 | — | (0.97 | ) | — | (0.97 | ) | 0.40 | 13.29 | ||||||||||||||||||||||||||||||
B | 12.59 | (0.14 | ) | — | 1.37 | 1.23 | — | (0.97 | ) | — | (0.97 | ) | 0.26 | 12.85 | ||||||||||||||||||||||||||||||
C | 12.59 | (0.15 | ) | — | 1.38 | 1.23 | — | (0.97 | ) | — | (0.97 | ) | 0.26 | 12.85 | ||||||||||||||||||||||||||||||
Y | 13.11 | 0.01 | — | 1.44 | 1.45 | — | (0.97 | ) | — | (0.97 | ) | 0.48 | 13.59 |
(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) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. |
20
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net | |||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio | |||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Turnover Rate(d) | ||||||||||||||||||||
28.63 | % | $ | 127,459 | 1.60 | % | 1.21 | % | 1.21 | % | 0.65 | % | 52 | % | |||||||||||||
28.03 | 21,782 | 2.53 | 1.78 | 1.78 | 0.09 | — | ||||||||||||||||||||
27.69 | 23,058 | 2.28 | 2.02 | 2.02 | (0.16 | ) | — | |||||||||||||||||||
28.89 | 8,798 | 0.90 | 0.90 | 0.90 | 0.93 | — | ||||||||||||||||||||
(46.26 | ) | 127,999 | 1.44 | 1.40 | 1.40 | 0.15 | 52 | |||||||||||||||||||
(46.64 | ) | 24,329 | 2.31 | 2.06 | 2.06 | (0.50 | ) | — | ||||||||||||||||||
(46.68 | ) | 24,418 | 2.15 | 2.15 | 2.15 | (0.59 | ) | — | ||||||||||||||||||
(46.00 | ) | 7,983 | 0.92 | 0.92 | 0.92 | 0.64 | — | |||||||||||||||||||
16.72 | (e) | 311,227 | 1.39 | 1.39 | 1.39 | — | 46 | |||||||||||||||||||
15.86 | (e) | 60,957 | 2.23 | 2.15 | 2.15 | (0.75 | ) | — | ||||||||||||||||||
15.94 | (e) | 63,292 | 2.10 | 2.10 | 2.10 | (0.70 | ) | — | ||||||||||||||||||
17.38 | (e) | 1,961 | 0.89 | 0.89 | 0.89 | 0.70 | — | |||||||||||||||||||
21.37 | 305,002 | 1.45 | 1.40 | 1.40 | 0.06 | 40 | ||||||||||||||||||||
20.46 | 62,580 | 2.28 | 2.15 | 2.15 | (0.69 | ) | — | |||||||||||||||||||
20.45 | 63,302 | 2.16 | 2.15 | 2.15 | (0.69 | ) | — | |||||||||||||||||||
21.90 | 31,100 | 0.94 | 0.94 | 0.94 | 0.48 | — | ||||||||||||||||||||
11.31 | 280,662 | 1.49 | 1.40 | 1.40 | (0.31 | ) | 49 | |||||||||||||||||||
10.40 | 59,350 | 2.33 | 2.15 | 2.15 | (1.06 | ) | — | |||||||||||||||||||
10.40 | 61,194 | 2.19 | 2.15 | 2.15 | (1.06 | ) | — | |||||||||||||||||||
11.76 | 39,965 | 0.96 | 0.96 | 0.96 | 0.13 | — |
21
The Hartford Mutual Funds, Inc.
December 15, 2009
22
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
23
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006–2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. | ||
* 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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 – 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 – 2009. |
24
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
25
DRD* | 100.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.022 | N/A | N/A | 0.022 | ||||||||||||
Class Y | 0.072 | N/A | N/A | 0.072 |
26
Actual return | Hypothetical (5% return before expenses) | |||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | ||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | |||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | ||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | ||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | ||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,213.00 | $ | 6.97 | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1.25 | % | 184 | 365 | ||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,210.00 | $ | 10.31 | $ | 1,000.00 | $ | 1,015.88 | $ | 9.40 | 1.85 | 184 | 365 | |||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,208.80 | $ | 11.47 | $ | 1,000.00 | $ | 1,014.82 | $ | 10.46 | 2.06 | 184 | 365 | |||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,214.70 | $ | 4.86 | $ | 1,000.00 | $ | 1,020.82 | $ | 4.43 | 0.87 | 184 | 365 |
27
28
29
30
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Money Market Fund |
Financial Statements | ||||
2 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 |
Shares or Principal Amount | Market Value ╪ | |||||||
CERTIFICATES OF DEPOSIT — 6.9% | ||||||||
Finance and Insurance — 6.9% | ||||||||
Barclay’s Bank plc (New York Branch) | ||||||||
$ | 4,000 | 0.15%, 12/02/2009 | $ | 4,000 | ||||
4,250 | 0.16%, 11/23/2009 | 4,250 | ||||||
4,250 | 0.18%, 01/13/2010 | 4,250 | ||||||
4,500 | 0.20%, 12/23/2009 | 4,500 | ||||||
BNP Paribas Finance | ||||||||
3,500 | 0.19%, 11/13/2009 | 3,500 | ||||||
2,250 | 0.22%, 11/18/2009 | 2,250 | ||||||
6,250 | 0.23%, 01/07/2010 | 6,250 | ||||||
5,000 | 0.25%, 12/10/2009 | 5,000 | ||||||
Deutsche Bank | ||||||||
4,250 | 0.14%, 11/06/2009 | 4,250 | ||||||
4,500 | 0.17%, 12/01/2009 | 4,500 | ||||||
State Street Bank & Trust Co. | ||||||||
4,500 | 0.21%, 11/13/2009 | 4,500 | ||||||
Toronto-Dominion Holdings | ||||||||
6,250 | 0.20%, 01/26/2010 | 6,250 | ||||||
5,250 | 0.50%, 11/18/2009 | 5,250 | ||||||
58,750 | ||||||||
Total certificates of deposit (cost $58,750) | $ | 58,750 | ||||||
COMMERCIAL PAPER — 48.6% | ||||||||
Beverage and Tobacco Product Manufacturing — 2.0% | ||||||||
Coca Cola Co. | ||||||||
$ | 5,500 | 0.20%, 01/15/2010 ○ | $ | 5,498 | ||||
4,500 | 0.21%, 12/16/2009 | 4,499 | ||||||
7,350 | 0.22%, 11/20/2009 | 7,349 | ||||||
17,346 | ||||||||
Chemical Manufacturing — 3.9% | ||||||||
Export Development Canada | ||||||||
5,500 | 0.15%, 02/18/2010 ○ | 5,497 | ||||||
5,750 | 0.16%, 02/16/2010 ○ | 5,747 | ||||||
3,750 | 0.16%, 12/02/2009 | 3,749 | ||||||
2,000 | 0.17%, 12/11/2009 | 2,000 | ||||||
3,250 | 0.21%, 11/18/2009 | 3,250 | ||||||
Praxair, Inc. | ||||||||
12,578 | 0.11%, 11/04/2009 — 11/10/2009 ○ | 12,578 | ||||||
32,821 | ||||||||
Computer and Electrical Products Manufacturing — 2.0% | ||||||||
Microsoft Corp. | ||||||||
8,000 | 0.12%, 01/19/2010 ○ | 7,998 | ||||||
6,000 | 0.14%, 12/16/2009 | 5,999 | ||||||
3,000 | 0.18%, 11/19/2009 | 3,000 | ||||||
16,997 | ||||||||
Finance and Insurance — 19.5% | ||||||||
Bank of America Corp. | ||||||||
2,000 | 0.17%, 11/24/2009 ○ | 2,000 | ||||||
5,250 | 0.23%, 12/16/2009 | 5,249 | ||||||
2,250 | 0.24%, 12/21/2009 | 2,249 | ||||||
3,250 | 0.25%, 01/08/2010 ○ | 3,248 | ||||||
Deutsche Bank | ||||||||
4,250 | 0.20%, 01/05/2010 ○ | 4,248 | ||||||
European Investment Bank | ||||||||
6,000 | 0.11%, 11/09/2009 ○ | 6,000 | ||||||
11,500 | 0.12%, 11/13/2009 — 12/22/2009 ○ | 11,499 | ||||||
7,750 | 0.20%, 11/20/2009 | 7,749 | ||||||
International Finance Corp. | ||||||||
11,250 | 0.12%, 11/02/2009 ○ | 11,250 | ||||||
JP Morgan Chase Funding, Inc. | ||||||||
7,000 | 0.15%, 11/09/2009 ○ | 7,000 | ||||||
5,500 | 0.20%, 01/05/2010 ○ | 5,498 | ||||||
4,500 | 0.21%, 12/14/2009 | 4,499 | ||||||
Kreditanstalt fuer Wiederaufbau | ||||||||
7,600 | 0.12%, 11/13/2009 — 11/24/2009 ■ ○ | 7,600 | ||||||
13,500 | 0.20%, 01/13/2010 — 01/19/2010 ■ ○ | 13,494 | ||||||
4,250 | 0.21%, 01/29/2010 ■ ○ | 4,248 | ||||||
Queensland Treasury Corp. | ||||||||
3,750 | 0.15%, 12/02/2009 ○ | 3,750 | ||||||
8,000 | 0.20%, 12/14/2009 — 12/21/2009 | 7,998 | ||||||
4,500 | 0.23%, 02/26/2010 ○ | 4,497 | ||||||
Rabobank USA | ||||||||
2,000 | 0.18%, 11/24/2009 | 2,000 | ||||||
2,000 | 0.19%, 11/10/2009 | 2,000 | ||||||
4,500 | 0.23%, 12/01/2009 | 4,499 | ||||||
4,500 | 0.24%, 11/30/2009 | 4,499 | ||||||
Royal Bank of Canada | ||||||||
3,750 | 0.11%, 12/18/2009 ○ | 3,749 | ||||||
6,000 | 0.15%, 01/20/2010 ○ | 5,998 | ||||||
7,250 | 0.16%, 11/17/2009 | 7,249 | ||||||
State Street Corp. | ||||||||
2,000 | 0.22%, 12/22/2009 | 2,000 | ||||||
4,500 | 0.23%, 01/06/2010 ○ | 4,498 | ||||||
2,000 | 0.23%, 12/21/2009 | 1,999 | ||||||
United Technology Corp. | ||||||||
10,000 | 0.10%, 11/02/2009 ■ ○ | 10,000 | ||||||
4,750 | 0.11%, 11/19/2009 ■ ○ | 4,750 | ||||||
165,317 | ||||||||
Foreign Governments — 10.7% | ||||||||
British Columbia (Province of) | ||||||||
3,400 | 0.10%, 01/28/2010 ○ | 3,399 | ||||||
5,000 | 0.11%, 01/07/2010 ○ | 4,999 | ||||||
1,000 | 0.15%, 01/05/2010 ○ | 1,000 | ||||||
3,800 | 0.16%, 02/08/2010 ○ | 3,798 | ||||||
11,750 | 0.16%, 11/13/2009 — 12/16/2009 | 11,748 | ||||||
International Bank for Reconstruction & Development | ||||||||
10,500 | 0.16%, 11/25/2009 — 02/01/2010 ○ | 10,497 | ||||||
3,500 | 0.18%, 11/17/2009 ○ | 3,500 | ||||||
Ontario (Province of) | ||||||||
4,000 | 0.18%, 01/08/2010 ○ | 3,998 | ||||||
4,000 | 0.19%, 01/06/2010 ○ | 3,998 | ||||||
5,750 | 0.21%, 11/30/2009 | 5,749 | ||||||
12,100 | 0.23%, 11/05/2009 — 11/13/2009 | 12,100 | ||||||
Quebec (Province of) | ||||||||
3,000 | 0.14%, 11/25/2009 ■ ○ | 3,000 | ||||||
10,500 | 0.18%, 12/10/2009 ○ | 10,498 | ||||||
3,000 | 0.18%, 01/11/2010 ■ ○ | 2,999 | ||||||
9,000 | 0.23%, 11/03/2009 ■ | 9,000 | ||||||
90,283 | ||||||||
Health Care and Social Assistance — 1.6% | ||||||||
Abbott Laboratories | ||||||||
9,250 | 0.13%, 12/14/2009 — 01/08/2010 ■ ○ | 9,248 | ||||||
4,250 | 0.15%, 01/04/2010 ■ ○ | 4,249 | ||||||
13,497 | ||||||||
2
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMERCIAL PAPER — 48.6% — (continued) | ||||||||
Petroleum and Coal Products Manufacturing — 1.6% | ||||||||
ConocoPhillips | ||||||||
$ | 4,500 | 0.20%, 11/19/2009 ■ | $ | 4,499 | ||||
5,800 | 0.22%, 11/05/2009 ■ | 5,800 | ||||||
3,000 | 0.23%, 12/15/2009 ■ | 2,999 | ||||||
13,298 | ||||||||
Retail Trade — 1.9% | ||||||||
Walmart Stores | ||||||||
3,500 | 0.10%, 12/11/2009 ○ | 3,500 | ||||||
4,000 | 0.12%, 11/12/2009 ○ | 4,000 | ||||||
4,500 | 0.13%, 11/16/2009 ○ | 4,500 | ||||||
4,250 | 0.14%, 12/04/2009 ■ ○ | 4,249 | ||||||
16,249 | ||||||||
Soap, Cleaning Compound, Toiletries Manufacturing — 3.9% | ||||||||
Colgate-Palmolive Co. | ||||||||
4,500 | 0.08%, 11/24/2009 ○ | 4,500 | ||||||
3,500 | 0.09%, 11/04/2009 ■ ○ | 3,500 | ||||||
4,000 | 0.09%, 11/09/2009 ○ | 4,000 | ||||||
4,406 | 0.10%, 11/06/2009 ○ | 4,406 | ||||||
Procter & Gamble Co. | ||||||||
4,500 | 0.09%, 11/02/2009 ■ ○ | 4,500 | ||||||
5,000 | 0.10%, 11/05/2009 ■ ○ | 5,000 | ||||||
4,000 | 0.19%, 11/03/2009 ■ | 4,000 | ||||||
3,500 | 0.20%, 12/15/2009 ■ | 3,499 | ||||||
33,405 | ||||||||
Utilities — 1.5% | ||||||||
Florida Power and Light Co. | ||||||||
12,750 | 0.10%, 11/03/2009 ○ | 12,750 | ||||||
Total commercial paper (cost $411,963) | $ | 411,963 | ||||||
OTHER POOLS AND FUNDS — 4.6% | ||||||||
39,031 | JP Morgan U.S. Government Money Market Fund | $ | 39,031 | |||||
— | State Street Bank U.S. Government Money Market Fund | — | ||||||
— | Wells Fargo Advantage Government Money Market Fund | — | ||||||
Total time deposits (cost $39,031) | $ | 39,031 | ||||||
REPURCHASE AGREEMENTS — 2.8% | ||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 11/02/2009 in the amount of $11,927, collateralized by U.S. Treasury Bond 5.25% — 7.88%, 2021 — 2029, value of $12,352) | ||||||||
$ | 11,927 | 0.06% dated 10/30/2009 | $ | 11,927 | ||||
RBS Greenwich Capital Markets TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $6,000, collateralized by U.S. Treasury Bond 5.00%, 2037, U.S. Treasury Note 3.13% — 4.63%, 2013 — 2017, value of $6,120) | ||||||||
5,999 | 0.06% dated 10/30/2009 | 5,999 | ||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 11/02/2009 in the amount of $5,495, collateralized by U.S. Treasury Note 1.50%, 2010, value of $5,570) | ||||||||
5,495 | 0.04% dated 10/30/2009 | 5,495 | ||||||
Total repurchase agreements (cost $23,421) | $ | 23,421 | ||||||
U.S. GOVERNMENT AGENCIES — 23.1% | ||||||||
Federal Home Loan Bank — 7.6% | ||||||||
$ | 4,500 | 0.08%, 12/17/2009 Δ | $ | 4,500 | ||||
8,000 | 0.08%, 11/04/2009 ○ | 8,000 | ||||||
11,500 | 0.10%, 11/17/2009 — 01/27/2010 ○ | 11,498 | ||||||
6,500 | 0.12%, 01/22/2010 ○ | 6,498 | ||||||
14,113 | 0.13%, 01/15/2010 — 02/01/2010 ○ | 14,108 | ||||||
7,750 | 0.17%, 12/11/2009 | 7,749 | ||||||
4,000 | 0.17%, 11/25/2009 ○ | 4,000 | ||||||
8,000 | 0.18%, 11/06/2009 | 8,000 | ||||||
64,353 | ||||||||
Federal Home Loan Mortgage Corp. — 7.5% | ||||||||
2,000 | 0.09%, 11/23/2009 ○ | 2,000 | ||||||
7,907 | 0.10%, 12/21/2009 — 01/04/2010 ○ | 7,906 | ||||||
10,828 | 0.11%, 02/02/2010 ○ | 10,825 | ||||||
6,000 | 0.12%, 01/26/2010 ○ | 5,998 | ||||||
8,113 | 0.13%, 01/27/2010 ○ | 8,110 | ||||||
6,000 | 0.15%, 02/16/2010 ○ | 5,997 | ||||||
4,296 | 0.15%, 11/16/2009 | 4,296 | ||||||
5,000 | 0.16%, 12/07/2009 | 4,999 | ||||||
9,500 | 0.19%, 11/09/2009 | 9,500 | ||||||
4,500 | 0.27%, 11/02/2009 | 4,500 | ||||||
64,131 | ||||||||
Federal National Mortgage Association — 8.0% | ||||||||
14,630 | 0.09%, 11/25/2009 — 12/09/2009 ○ | 14,628 | ||||||
14,500 | 0.10%, 11/12/2009 — 12/30/2009 ○ | 14,499 | ||||||
11,250 | 0.11%, 11/16/2009 ○ | 11,250 | ||||||
10,525 | 0.12%, 02/01/2010 — 02/05/2010 ○ | 10,522 | ||||||
7,250 | 0.18%, 12/17/2009 | 7,248 | ||||||
4,250 | 0.18%, 02/25/2010 ○ | 4,321 | ||||||
5,000 | 0.24%, 11/04/2009 | 5,000 | ||||||
67,468 | ||||||||
Total U.S. government agencies (cost $195,952) | $ | 195,952 | ||||||
U.S. TREASURY BILLS — 9.6% | ||||||||
$ | 30,000 | 0.07%, 01/14/2010 ○ | $ | 29,996 | ||||
17,000 | 0.08%, 01/21/2010 ○ | 16,997 | ||||||
16,750 | 0.10%, 01/28/2010 ○ | 16,747 | ||||||
17,750 | 0.18%, 11/19/2009 ○ | 17,748 | ||||||
Total U.S. treasury bills (cost $81,488) | $ | 81,488 | ||||||
3
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
U.S. TREASURY NOTES — 4.2% | ||||||||||||
$ | 35,750 | 0.09%, 11/15/2009 ○ | $ | 35,811 | ||||||||
Total U.S. treasury notes (cost $35,811) | $ | 35,811 | ||||||||||
Total investments (cost $846,416) ▲ | 99.8 | % | $ | 846,416 | ||||||||
Other assets and liabilities | 0.2 | % | 1,367 | |||||||||
Total net assets | 100.0 | % | $ | 847,783 | ||||||||
Note: | Percentage of investments are shown in the ratio of the total market value to total net assets. The rates presented in this Schedule of Investments are yields, unless otherwise noted. Market value of investments in U.S. dollar denominated securities of foreign issuers represents 12.0% of total net assets at October 31, 2009. | |
▲ | Also represents cost for tax purposes. | |
Δ | Variable rate securities; the rate reported is the coupon rate in effect at October 31, 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 October 31, 2009, was $106,634, which represents 12.58% of total net assets. | |
○ | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Certificates of Deposit | $ | 58,750 | $ | — | $ | 58,750 | $ | — | ||||||||
Commercial Paper | 411,963 | — | 411,963 | — | ||||||||||||
Other Pools and Funds | 39,031 | 39,031 | — | — | ||||||||||||
Repurchase Agreements | 23,421 | — | 23,421 | — | ||||||||||||
U.S. Government Agencies | 195,952 | — | 195,952 | — | ||||||||||||
U.S. Treasury Bills | 81,488 | — | 81,488 | — | ||||||||||||
U.S. Treasury Notes | 35,811 | — | 35,811 | — | ||||||||||||
Total | $ | 846,416 | $ | 39,031 | $ | 807,385 | $ | — | ||||||||
5
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $846,416) | $ | 846,416 | ||
Receivables: | ||||
Fund shares sold | 2,598 | |||
Dividends and interest | 833 | |||
Other assets | 188 | |||
Total assets | 850,035 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 1,966 | |||
Investment management fees | 63 | |||
Accrued expenses | 223 | |||
Total liabilities | 2,252 | |||
Net assets | $ | 847,783 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 849,532 | |||
Accumulated undistributed net investment income | — | |||
Accumulated net realized loss on investments | (1,749 | ) | ||
Unrealized appreciation of investments | — | |||
Net assets | $ | 847,783 | ||
Shares authorized | 5,050,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 1.00/$1.00 | ||
Shares outstanding | 387,058 | |||
Net assets | $ | 386,036 | ||
Class B: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 51,335 | |||
Net assets | $ | 51,225 | ||
Class C: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 77,101 | |||
Net assets | $ | 76,846 | ||
Class R3: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 11,623 | |||
Net assets | $ | 11,621 | ||
Class R4: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 251,312 | |||
Net assets | $ | 250,995 | ||
Class R5: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 69,503 | |||
Net assets | $ | 69,464 | ||
Class Y: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 1,602 | |||
Net assets | $ | 1,596 | ||
6
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Interest | $ | 4,278 | ||
Total investment income | 4,278 | |||
Expenses: | ||||
Investment management fees | 4,188 | |||
Administrative services fees | 410 | |||
Transfer agent fees | 1,308 | |||
Distribution fees | ||||
Class A | 384 | |||
Class B | 228 | |||
Class C | 440 | |||
Class R3 | 1 | |||
Class R4 | 148 | |||
Custodian fees | 6 | |||
Accounting services fees | 149 | |||
Registration and filing fees | 196 | |||
Board of Directors’ fees | 27 | |||
Audit fees | 52 | |||
Other expenses | 683 | |||
Total expenses (before waivers and fees paid indirectly) | 8,220 | |||
Expense waivers | (4,148 | ) | ||
Custodian fee offset | (1 | ) | ||
Total waivers and fees paid indirectly | (4,149 | ) | ||
Total expenses, net | 4,071 | |||
Net Investment Income | 207 | |||
Net Realized Gain on Investments: | ||||
Net realized gain on investments in securities | 101 | |||
Net Realized Gain on Investments | 101 | |||
Net Gain on Investments | 101 | |||
Net Increase in Net Assets Resulting from Operations | $ | 308 | ||
7
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 207 | $ | 12,312 | ||||
Net realized gain (loss) on investments | 101 | (1,852 | ) | |||||
Net Increase In Net Assets Resulting From Operations | 308 | 10,460 | ||||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (264 | ) | (8,540 | ) | ||||
Class B | (20 | ) | (536 | ) | ||||
Class C | (32 | ) | (1,498 | ) | ||||
Class R3 | (1 | ) | (1 | ) | ||||
Class R4 | (126 | ) | (1,267 | ) | ||||
Class R5 | (29 | ) | (119 | ) | ||||
Class Y | (2 | ) | (84 | ) | ||||
Total distributions | (474 | ) | (12,045 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (100,491 | ) | 172,677 | |||||
Class B | (15,346 | ) | 37,462 | |||||
Class C | (63,317 | ) | 80,843 | |||||
Class R3 | 11,093 | 520 | ||||||
Class R4 | 102,586 | 131,487 | ||||||
Class R5 | 60,657 | 7,617 | ||||||
Class Y | 1 | (1,106 | ) | |||||
Net increase (decrease) from capital share transactions | (4,817 | ) | 429,500 | |||||
Net Increase (Decrease) In Net Assets | (4,983 | ) | 427,915 | |||||
Net Assets: | ||||||||
Beginning of period | 852,766 | 424,851 | ||||||
End of period | $ | 847,783 | $ | 852,766 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | — | $ | 267 | ||||
8
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six portfolios. Financial statements for The Hartford Money Market 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 without a front-end sales charge. Class B shares were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 Years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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’s investments are valued at amortized cost, which approximates market value. Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) on the valuation date. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
9
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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. To minimize counterparty risk, the 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 October 31, 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. |
10
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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 2009. | ||
g) | 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. | ||
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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
11
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 487 | $ | 12,123 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Accumulated Capital Losses * | $ | (1,749 | ) | |
Total Accumulated Deficit | $ | (1,749 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase accumulated net realized gain on investments by $1 and decrease paid-in-capital by $1. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 1,749 | ||
Total | $ | 1,749 | ||
At October 31, 2009, the Fund utilized $102 of capital loss carryforwards to offset capital gains earned during the year. | |||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 2009; the rates are accrued daily and paid monthly: |
12
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 services 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 year ended October 31, 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 | ||||||||||||||||||
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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 0.41 | % | 0.90 | % | 0.95 | % | 0.95 | % | 0.95 | % | ||||||||||
Class B Shares | 0.44 | 1.65 | 1.70 | 1.70 | 1.70 | |||||||||||||||
Class C Shares | 0.46 | 1.59 | 1.69 | 1.70 | 1.70 | |||||||||||||||
Class R3 Shares | 0.24 | 1.15 | 1.20 | * | ||||||||||||||||
Class R4 Shares | 0.36 | 0.85 | 0.90 | * | ||||||||||||||||
Class R5 Shares | 0.25 | 0.63 | 0.60 | * | ||||||||||||||||
Class Y Shares | 0.34 | 0.52 | 0.55 | 0.55 | 0.55 |
* | 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 year ended October 31, 2009, HIFSCO received contingent deferred sales charges of $590 from the Fund. |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $19. 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 period of six months, effective March 1, 2009. Effective September 1, 2009, the Board of Directors approved a six month extension of the reduction of distribution and service fees under the Fund’s 12b-1 plan. 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 of Director’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. From October 2008 through March 2009, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $1,286 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
14
5. | Affiliate Holdings: | |
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class Y | 1,602 |
6. | Investment Transactions: | |
For the year ended October 31, 2009, the costs of purchases and sales of securities (including U.S. Government Obligations) for the Fund were $13,802,639 and $13,812,150, respectively. | ||
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 404,276 | 228 | (504,995 | ) | — | (100,491 | ) | 630,595 | 7,915 | (465,833 | ) | — | 172,677 | |||||||||||||||||||||||||||
Amount | $ | 404,276 | $ | 228 | $ | (504,995 | ) | $ | — | $ | (100,491 | ) | $ | 630,595 | $ | 7,915 | $ | (465,833 | ) | $ | — | $ | 172,677 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 45,387 | 18 | (60,751 | ) | — | (15,346 | ) | 76,206 | 496 | (39,240 | ) | — | 37,462 | |||||||||||||||||||||||||||
Amount | $ | 45,387 | $ | 18 | $ | (60,751 | ) | $ | — | $ | (15,346 | ) | $ | 76,206 | $ | 496 | $ | (39,240 | ) | $ | — | $ | 37,462 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 105,775 | 29 | (169,121 | ) | — | (63,317 | ) | 238,390 | 1,260 | (158,807 | ) | — | 80,843 | |||||||||||||||||||||||||||
Amount | $ | 105,775 | $ | 29 | $ | (169,121 | ) | $ | — | $ | (63,317 | ) | $ | 238,390 | $ | 1,260 | $ | (158,807 | ) | $ | — | $ | 80,843 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 13,901 | 1 | (2,809 | ) | — | 11,093 | 554 | 1 | (35 | ) | — | 520 | ||||||||||||||||||||||||||||
Amount | $ | 13,901 | $ | 1 | $ | (2,809 | ) | $ | — | $ | 11,093 | $ | 554 | $ | 1 | $ | (35 | ) | $ | — | $ | 520 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 241,491 | 116 | (139,021 | ) | — | 102,586 | 140,651 | 1,288 | (10,452 | ) | — | 131,487 | ||||||||||||||||||||||||||||
Amount | $ | 241,491 | $ | 116 | $ | (139,021 | ) | $ | — | $ | 102,586 | $ | 140,651 | $ | 1,288 | $ | (10,452 | ) | $ | — | $ | 131,487 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 94,014 | 28 | (33,385 | ) | — | 60,657 | 9,570 | 120 | (2,073 | ) | — | 7,617 | ||||||||||||||||||||||||||||
Amount | $ | 94,014 | $ | 28 | $ | (33,385 | ) | $ | — | $ | 60,657 | $ | 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) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 4,777 | $ | 4,777 | |||||
For the Year Ended October 31, 2008 | 3,962 | $ | 3,962 |
8. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 1.00 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1.00 | ||||||||||||||||||||||
B | 1.00 | — | — | — | — | — | — | — | — | — | 1.00 | |||||||||||||||||||||||||||||||||
C | 1.00 | — | — | — | — | — | — | — | — | — | 1.00 | |||||||||||||||||||||||||||||||||
R3 | 1.00 | — | — | — | — | — | — | — | — | — | 1.00 | |||||||||||||||||||||||||||||||||
R4 | 1.00 | — | — | — | — | — | — | — | — | — | 1.00 | |||||||||||||||||||||||||||||||||
R5 | 1.00 | — | — | — | — | — | — | — | — | — | 1.00 | |||||||||||||||||||||||||||||||||
Y | 1.00 | — | — | — | — | — | — | — | — | — | 1.00 | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 1.00 | 0.02 | — | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
B | 1.00 | 0.02 | — | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
C | 1.00 | 0.02 | — | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
R3 | 1.00 | 0.02 | — | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
R4 | 1.00 | 0.02 | — | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
R5 | 1.00 | 0.03 | — | — | 0.03 | (0.03 | ) | — | — | (0.03 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
Y | 1.00 | 0.03 | — | — | 0.03 | (0.03 | ) | — | — | (0.03 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 1.00 | 0.04 | — | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
B | 1.00 | 0.04 | — | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
C | 1.00 | 0.04 | — | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
R3(e) | 1.00 | 0.04 | — | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
R4(e) | 1.00 | 0.04 | — | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
R5(e) | 1.00 | 0.04 | — | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
Y | 1.00 | 0.05 | — | — | 0.05 | (0.05 | ) | — | — | (0.05 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 1.00 | 0.04 | — | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
B | 1.00 | 0.03 | — | — | 0.03 | (0.03 | ) | — | — | (0.03 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
C | 1.00 | 0.03 | — | — | 0.03 | (0.03 | ) | — | — | (0.03 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
Y | 1.00 | 0.04 | — | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 1.00 | 0.02 | — | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
B | 1.00 | 0.01 | — | — | 0.01 | (0.01 | ) | — | — | (0.01 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
C | 1.00 | 0.01 | — | — | 0.01 | (0.01 | ) | — | — | (0.01 | ) | — | 1.00 | |||||||||||||||||||||||||||||||
Y | 1.00 | 0.02 | — | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 |
(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) | Commenced operations on December 22, 2006. | |
(f) | Not annualized. | |
(g) | Annualized. |
16
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net | |||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio | |||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Turnover Rate(d) | ||||||||||||||||||
0.05 | % | $ | 386,036 | 0.88 | % | 0.45 | % | 0.41 | % | 0.03 | % | N/A | ||||||||||||
0.03 | 51,225 | 1.11 | 0.48 | 0.44 | 0.00 | — % | ||||||||||||||||||
0.03 | 76,846 | 1.06 | 0.50 | 0.46 | 0.00 | — | ||||||||||||||||||
0.04 | 11,621 | 0.79 | 0.28 | 0.24 | 0.00 | — | ||||||||||||||||||
0.06 | 250,995 | 0.78 | 0.40 | 0.36 | 0.02 | — | ||||||||||||||||||
0.09 | 69,464 | 0.66 | 0.29 | 0.25 | 0.02 | — | ||||||||||||||||||
0.11 | 1,596 | 0.58 | 0.38 | 0.34 | 0.09 | — | ||||||||||||||||||
2.31 | 486,596 | 0.99 | 0.90 | 0.90 | 2.23 | N/A | ||||||||||||||||||
1.54 | 66,581 | 1.71 | 1.65 | 1.65 | 1.40 | — | ||||||||||||||||||
1.60 | 140,174 | 1.60 | 1.60 | 1.60 | 1.49 | — | ||||||||||||||||||
2.07 | 529 | 1.35 | 1.15 | 1.15 | 1.33 | — | ||||||||||||||||||
2.37 | 148,465 | 0.94 | 0.85 | 0.85 | 1.91 | — | ||||||||||||||||||
2.60 | 8,826 | 0.63 | 0.63 | 0.63 | 2.09 | — | ||||||||||||||||||
2.69 | 1,595 | 0.52 | 0.52 | 0.52 | 2.77 | — | ||||||||||||||||||
4.49 | 314,872 | 1.13 | 0.95 | 0.95 | 4.40 | N/A | ||||||||||||||||||
3.71 | 29,219 | 1.82 | 1.70 | 1.70 | 3.65 | — | ||||||||||||||||||
3.72 | 59,575 | 1.72 | 1.69 | 1.69 | 3.66 | — | ||||||||||||||||||
3.63 | (f) | 10 | 1.36 | (g) | 1.20 | (g) | 1.20 | (g) | 4.16 | (g) | — | |||||||||||||
3.95 | (f) | 17,239 | 1.01 | (g) | 0.90 | (g) | 0.90 | (g) | 4.49 | (g) | — | |||||||||||||
4.18 | (f) | 1,229 | 0.72 | (g) | 0.60 | (g) | 0.60 | (g) | 4.79 | (g) | — | |||||||||||||
4.90 | 2,707 | 0.58 | 0.55 | 0.55 | 4.77 | — | ||||||||||||||||||
4.00 | 207,592 | 1.14 | 0.95 | 0.95 | 3.95 | N/A | ||||||||||||||||||
3.22 | 27,995 | 1.79 | 1.70 | 1.70 | 3.18 | — | ||||||||||||||||||
3.22 | 16,997 | 1.76 | 1.70 | 1.70 | 3.20 | — | ||||||||||||||||||
4.34 | 13,628 | 0.61 | 0.55 | 0.55 | 4.29 | — | ||||||||||||||||||
1.99 | 182,308 | 1.22 | 0.95 | 0.95 | 1.96 | N/A | ||||||||||||||||||
1.23 | 30,716 | 1.88 | 1.70 | 1.70 | 1.16 | — | ||||||||||||||||||
1.23 | 18,790 | 1.80 | 1.70 | 1.70 | 1.19 | — | ||||||||||||||||||
2.40 | 16,114 | 0.61 | 0.55 | 0.55 | 2.47 | — |
17
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
18
19
Directors and Officers (Unaudited) — (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
20
21
U.S. Treasury* | 8.00 | % | ||
Other Direct Federal Obligations* | 4.00 | % | ||
Other Securities | 88.00 | % | ||
Total | 100.00 | % | ||
QII† | 100.00 | % |
* | The income received from federal obligations. | |
† | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.001 | N/A | N/A | 0.001 | ||||||||||||
Class B | 0.000 | * | N/A | N/A | 0.000 | * | ||||||||||
Class C | 0.000 | * | N/A | N/A | 0.000 | * | ||||||||||
Class R3 | 0.000 | * | N/A | N/A | 0.000 | * | ||||||||||
Class R4 | 0.001 | N/A | N/A | 0.001 | ||||||||||||
Class R5 | 0.001 | N/A | N/A | 0.001 | ||||||||||||
Class Y | 0.001 | N/A | N/A | 0.001 |
* | Per share distribution amounts are less than 0.0005. |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,000.30 | $ | 1.31 | $ | 1,000.00 | $ | 1,023.89 | $ | 1.33 | 0.26 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,000.30 | $ | 1.31 | $ | 1,000.00 | $ | 1,023.89 | $ | 1.33 | 0.26 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,000.30 | $ | 1.31 | $ | 1,000.00 | $ | 1,023.89 | $ | 1.33 | 0.26 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,000.30 | $ | 1.11 | $ | 1,000.00 | $ | 1,024.10 | $ | 1.12 | 0.22 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,000.30 | $ | 1.31 | $ | 1,000.00 | $ | 1,023.89 | $ | 1.33 | 0.26 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,000.30 | $ | 1.26 | $ | 1,000.00 | $ | 1,023.95 | $ | 1.28 | 0.25 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,000.30 | $ | 1.26 | $ | 1,000.00 | $ | 1,023.95 | $ | 1.28 | 0.25 | 184 | 365 |
23
24
25
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
26
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Select MidCap Value Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
22 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 | ||||
29 | ||||
30 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks long-term capital appreciation. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
Select MidCap Value A# | 16.60 | % | -1.52 | % | ||||
Select MidCap Value A## | 10.19 | % | -2.75 | % | ||||
Select MidCap Value B# | 16.28 | % | -2.09 | % | ||||
Select MidCap Value B## | 11.28 | % | -2.45 | % | ||||
Select MidCap Value C# | 16.00 | % | -2.17 | % | ||||
Select MidCap Value C## | 15.00 | % | -2.17 | % | ||||
Select MidCap Value Y# | 16.95 | % | -1.21 | % | ||||
Russell MidCap Value Index | 14.52 | % | 0.38 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||
Hugh Whelan, CFA | Kurt Cubbage, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 0.7 | % | ||
Banks (Financials) | 4.0 | |||
Capital Goods (Industrials) | 7.8 | |||
Commercial & Professional Services (Industrials) | 1.5 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 3.0 | |||
Consumer Services (Consumer Discretionary) | 1.6 | |||
Diversified Financials (Financials) | 2.6 | |||
Energy (Energy) | 6.8 | |||
Food, Beverage & Tobacco (Consumer Staples) | 5.3 | |||
Health Care Equipment & Services (Health Care) | 4.2 | |||
Insurance (Financials) | 9.7 | |||
Materials (Materials) | 10.1 | |||
Media (Consumer Discretionary) | 2.3 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 1.3 | |||
Real Estate (Financials) | 10.0 | |||
Retailing (Consumer Discretionary) | 7.4 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 3.3 | |||
Software & Services (Information Technology) | 3.0 | |||
Technology Hardware & Equipment (Information Technology) | 3.4 | |||
Telecommunication Services (Services) | 1.7 | |||
Transportation (Industrials) | 0.5 | |||
Utilities (Utilities) | 7.3 | |||
Short-Term Investments | 2.5 | |||
Other Assets and Liabilities | — | |||
Total | 100.0 | % | ||
3
October 31, 2009
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 97.5% | ||||||||
Automobiles & Components — 0.7% | ||||||||
7 | Thor Industries, Inc. | $ | 170 | |||||
9 | TRW Automotive Holdings Corp. • | 141 | ||||||
311 | ||||||||
Banks — 4.0% | ||||||||
3 | BOK Financial Corp. | 133 | ||||||
50 | Fifth Third Bankcorp | 448 | ||||||
1 | First Citizens Bancshares Class A | 183 | ||||||
12 | First Horizon National Corp. | 148 | ||||||
10 | Hudson City Bancorp, Inc. | 128 | ||||||
29 | Keycorp | 157 | ||||||
38 | Regions Financial Corp. | 182 | ||||||
10 | SunTrust Banks, Inc. | 187 | ||||||
30 | Synovus Financial Corp. | 68 | ||||||
17 | Zion Bancorp | 237 | ||||||
1,871 | ||||||||
Capital Goods — 7.8% | ||||||||
6 | AGCO Corp. • | 163 | ||||||
5 | Carlisle Cos., Inc. | 165 | ||||||
6 | Cooper Industries plc Class A | 236 | ||||||
5 | Cummins, Inc. | 198 | ||||||
4 | Dover Corp. | 132 | ||||||
7 | Eaton Corp. | 420 | ||||||
3 | Hubbell, Inc. Class B | 140 | ||||||
7 | ITT Corp. | 358 | ||||||
3 | Joy Global, Inc. | 172 | ||||||
5 | L-3 Communications Holdings, Inc. | 354 | ||||||
10 | Oshkosh Corp. | 325 | ||||||
7 | Parker-Hannifin Corp. | 349 | ||||||
5 | Quanta Services, Inc. • | 112 | ||||||
5 | Rockwell Automation, Inc. | 221 | ||||||
8 | Thomas & Betts Corp. • | 284 | ||||||
3,629 | ||||||||
Commercial & Professional Services — 1.5% | ||||||||
6 | Manpower, Inc. | 261 | ||||||
9 | Pitney Bowes, Inc. | 225 | ||||||
11 | R.R. Donnelley & Sons Co. | 215 | ||||||
701 | ||||||||
Consumer Durables & Apparel — 3.0% | ||||||||
6 | Fortune Brands, Inc. | 218 | ||||||
7 | Garmin Ltd. | 221 | ||||||
4 | Mohawk Industries, Inc. • | 167 | ||||||
9 | Newell Rubbermaid, Inc. | 124 | ||||||
— | NVR, Inc. • | 187 | ||||||
4 | Phillips Van-Heusen Corp. | 157 | ||||||
2 | Polo Ralph Lauren Corp. | 167 | ||||||
2 | V.F. Corp. | 142 | ||||||
1,383 | ||||||||
Consumer Services — 1.6% | ||||||||
10 | International Game Technology | 180 | ||||||
9 | Marriott International, Inc. Class A | 224 | ||||||
5 | Penn National Gaming, Inc. • | 118 | ||||||
8 | Starwood Hotels & Resorts | 224 | ||||||
746 | ||||||||
Diversified Financials — 2.6% | ||||||||
25 | Discover Financial Services, Inc. | 352 | ||||||
19 | Interactive Brokers Group • | 309 | ||||||
7 | Invesco Ltd. | 142 | ||||||
17 | Raymond James Financial, Inc. | 411 | ||||||
1,214 | ||||||||
Energy — 6.8% | ||||||||
4 | Comstock Resources, Inc. • | 165 | ||||||
7 | ENSCO International, Inc. | 311 | ||||||
7 | Exterran Holdings, Inc. • | 143 | ||||||
8 | Massey Energy Co. | 227 | ||||||
5 | Murphy Oil Corp. | 302 | ||||||
17 | Nabors Industries Ltd. • | 352 | ||||||
8 | Oil States International, Inc. • | 289 | ||||||
9 | Plains Exploration & Production Co. • | 225 | ||||||
7 | Pride International, Inc. • | 213 | ||||||
8 | Rowan Companies, Inc. | 184 | ||||||
— | Seahawk Drilling, Inc. • | 13 | ||||||
7 | Smith International, Inc. | 183 | ||||||
11 | Southern Union Co. | 217 | ||||||
11 | Spectra Energy Corp. | 201 | ||||||
3 | Whiting Petroleum Corp. • | 169 | ||||||
3,194 | ||||||||
Food, Beverage & Tobacco — 5.3% | ||||||||
7 | Brown-Forman Corp. | 354 | ||||||
6 | Bunge Ltd. Finance Corp. | 320 | ||||||
4 | Campbell Soup Co. | 137 | ||||||
18 | Constellation Brands, Inc. Class A • | 288 | ||||||
9 | Dr. Pepper Snapple Group • | 248 | ||||||
5 | H.J. Heinz Co. | 195 | ||||||
4 | Hershey Co. | 166 | ||||||
6 | Hormel Foods Corp. | 233 | ||||||
3 | J.M. Smucker Co. | 145 | ||||||
3 | Molson Coors Brewing Co. | 140 | ||||||
21 | Sara Lee Corp. | 235 | ||||||
2,461 | ||||||||
Health Care Equipment & Services — 4.2% | ||||||||
14 | CIGNA Corp. | 381 | ||||||
12 | Hill-Rom Holdings, Inc. | 233 | ||||||
24 | Hologic, Inc. • | 355 | ||||||
3 | Humana, Inc. • | 126 | ||||||
10 | IMS Health, Inc. | 169 | ||||||
6 | Kinetic Concepts, Inc. • | 182 | ||||||
3 | MEDNAX, Inc. • | 156 | ||||||
11 | Omnicare, Inc. | 243 | ||||||
3 | Universal Health Services, Inc. Class B | 145 | ||||||
1,990 | ||||||||
Insurance — 9.7% | ||||||||
— | Alleghany Corp. • | 109 | ||||||
5 | Allied World Assurance Holdings Ltd. | 228 | ||||||
7 | American Financial Group, Inc. | 177 | ||||||
6 | AON Corp. | 219 | ||||||
3 | Arch Capital Group Ltd. • | 229 | ||||||
6 | Aspen Insurance Holdings Ltd. | 163 | ||||||
4 | Assurant, Inc. | 132 | ||||||
6 | Axis Capital Holdings Ltd. | 159 | ||||||
7 | Cincinnati Financial Corp. | 178 | ||||||
17 | CNA Financial Corp. • | 361 | ||||||
5 | Endurance Specialty Holdings Ltd. | 165 | ||||||
5 | Erie Indemnity Co. | 162 | ||||||
4 | Everest Re Group Ltd. | 386 | ||||||
3 | PartnerRe Ltd. | 222 | ||||||
35 | Progressive Corp. | 565 | ||||||
6 | Transatlantic Holdings, Inc. | 308 | ||||||
10 | W.R. Berkley Corp. | 237 | ||||||
1 | White Mountains Insurance Group Ltd. | 186 |
4
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 97.5% — (continued) | ||||||||
Insurance — 9.7% — (continued) | ||||||||
22 | XL Capital Ltd. Class A | $ | 354 | |||||
4,540 | ||||||||
Materials — 10.1% | ||||||||
25 | AK Steel Holding Corp. | 400 | ||||||
21 | Cliff’s Natural Resources, Inc. | 740 | ||||||
8 | Compass Minerals Group, Inc. | 502 | ||||||
6 | FMC Corp. | 317 | ||||||
17 | Huntsman Corp. | 134 | ||||||
31 | International Paper Co. | 680 | ||||||
6 | Intrepid Potash, Inc. • | 160 | ||||||
1 | Martin Marietta Materials, Inc. | 105 | ||||||
6 | Owens-Illinois, Inc. • | 175 | ||||||
8 | Pactiv Corp. • | 176 | ||||||
5 | PPG Industries, Inc. | 279 | ||||||
10 | Reliance Steel & Aluminum | 361 | ||||||
16 | Steel Dynamics, Inc. | 215 | ||||||
9 | Temple-Inland, Inc. | 139 | ||||||
10 | United States Steel Corp. | 338 | ||||||
4,721 | ||||||||
Media — 2.3% | ||||||||
29 | CBS Corp. Class B | 339 | ||||||
20 | Gannett Co., Inc. | 197 | ||||||
13 | Liberty Global, Inc. • | 261 | ||||||
5 | Meredith Corp. | 122 | ||||||
— | Washington Post Co. Class B | 140 | ||||||
1,059 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 1.3% | ||||||||
6 | Endo Pharmaceuticals Holdings, Inc. • | 134 | ||||||
12 | Forest Laboratories, Inc. • | 335 | ||||||
9 | PerkinElmer, Inc. | 162 | ||||||
631 | ||||||||
Real Estate — 10.0% | ||||||||
4 | Alexandria Real Estate Equities, Inc. | 233 | ||||||
51 | Annaly Capital Management, Inc. | 864 | ||||||
2 | Avalonbay Communities, Inc. | 131 | ||||||
5 | Boston Properties, Inc. | 289 | ||||||
8 | Corporate Office Properties | 256 | ||||||
26 | Duke Realty, Inc. | 294 | ||||||
2 | Essex Property Trust, Inc. | 136 | ||||||
9 | Federal Realty Investment Trust | 537 | ||||||
5 | Health Care, Inc. | 242 | ||||||
7 | Hospitality Properties Trust | 135 | ||||||
13 | Host Hotels & Resorts, Inc. | 127 | ||||||
15 | Kimco Realty Corp. | 187 | ||||||
7 | Liberty Property Trust | 200 | ||||||
16 | Plum Creek Timber Co., Inc. | 498 | ||||||
8 | Realty Income Corp. | 176 | ||||||
4 | Ventas, Inc. | 149 | ||||||
11 | Weingarten Realty Investments | 211 | ||||||
4,665 | ||||||||
Retailing — 7.4% | ||||||||
10 | Abercrombie & Fitch Co. Class A | 315 | ||||||
10 | AutoNation, Inc. • | 169 | ||||||
23 | Chico’s FAS, Inc. • | 269 | ||||||
13 | J.C. Penney Co., Inc. | 431 | ||||||
26 | Liberty Media — Interactive A • | 291 | ||||||
20 | Limited Brands, Inc. | 359 | ||||||
26 | Macy’s, Inc. | 453 | ||||||
50 | Office Depot, Inc. • | 304 | ||||||
3 | Sears Holdings Corp. • | 200 | ||||||
3 | Sherwin-Williams Co. | 154 | ||||||
9 | Tiffany & Co. | 358 | ||||||
10 | Williams-Sonoma, Inc. | 178 | ||||||
3,481 | ||||||||
Semiconductors & Semiconductor Equipment — 3.3% | ||||||||
66 | Advanced Micro Devices, Inc. • | 301 | ||||||
30 | Atmel Corp. • | 111 | ||||||
27 | Integrated Device Technology, Inc. • | 158 | ||||||
10 | Intersil Corp. | 119 | ||||||
4 | KLA-Tencor Corp. | 133 | ||||||
43 | LSI Corp. • | 219 | ||||||
8 | Marvell Technology Group Ltd. • | 103 | ||||||
36 | Micron Technology, Inc. • | 243 | ||||||
16 | PMC — Sierra, Inc. • | 139 | ||||||
1,526 | ||||||||
Software & Services — 3.0% | ||||||||
7 | Amdocs Ltd. • | 166 | ||||||
9 | Autodesk, Inc. • | 214 | ||||||
17 | Broadridge Financial Solutions, Inc. | 362 | ||||||
10 | CA, Inc. | 213 | ||||||
25 | Novell, Inc. • | 100 | ||||||
10 | Nuance Communications, Inc. • | 126 | ||||||
10 | Synopsys, Inc. • | 225 | ||||||
1,406 | ||||||||
Technology Hardware & Equipment — 3.4% | ||||||||
21 | Ciena Corp. • | 243 | ||||||
5 | CommScope, Inc. • | 127 | ||||||
54 | JDS Uniphase Corp. • | 304 | ||||||
11 | Lexmark International, Inc. ADR • | 274 | ||||||
7 | SanDisk Corp. • | 138 | ||||||
13 | Sun Microsystems, Inc. • | 108 | ||||||
29 | Tellabs, Inc. • | 172 | ||||||
34 | Xerox Corp. | 254 | ||||||
1,620 | ||||||||
Telecommunication Services — 1.7% | ||||||||
13 | CenturyTel, Inc. | 417 | ||||||
7 | NII Holdings, Inc. Class B • | 191 | ||||||
21 | Windstream Corp. | 201 | ||||||
809 | ||||||||
Transportation — 0.5% | ||||||||
4 | Con-way, Inc. | 132 | ||||||
11 | Hertz Global Holdings, Inc. • | 98 | ||||||
230 | ||||||||
Utilities — 7.3% | ||||||||
10 | AES Corp. • | 126 | ||||||
13 | CenterPoint Energy, Inc. | 159 | ||||||
14 | CMS Energy Corp. | 189 | ||||||
4 | Consolidated Edison, Inc. | 144 | ||||||
7 | DPL, Inc. | 167 | ||||||
8 | Great Plains Energy, Inc. | 138 | ||||||
15 | Mirant Corp. • | 211 | ||||||
17 | N.V. Energy, Inc. | 198 | ||||||
3 | National Fuel Gas Co. | 127 | ||||||
7 | NRG Energy, Inc. • | 149 | ||||||
5 | OGE Energy Corp. | 160 | ||||||
5 | Oneok, Inc. | 188 | ||||||
5 | Pinnacle West Capital Corp. | 160 | ||||||
7 | Progress Energy, Inc. | 248 | ||||||
7 | SCANA Corp. | 223 | ||||||
5 | Sempra Energy | 270 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 97.5% — (continued) | ||||||||||||
Utilities — 7.3% — (continued) | ||||||||||||
6 | UGI Corp. | $ | 153 | |||||||||
3 | Wisconsin Energy Corp. | 125 | ||||||||||
16 | Xcel Energy, Inc. | 309 | ||||||||||
3,444 | ||||||||||||
Total common stocks (cost $42,163) | $ | 45,632 | ||||||||||
Total long-term investments (cost $42,163) | $ | 45,632 | ||||||||||
SHORT-TERM INVESTMENTS — 2.5% | ||||||||||||
Repurchase Agreements — 2.3% | ||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 11/02/2009 in the amount of $555, collateralized by U.S. Treasury Bond 5.25% — 7.88%, 2021 — 2029, value of $575) | ||||||||||||
$ | 555 | 0.06%, 10/30/2009 | $ | 555 | ||||||||
RBS Greenwich Capital Markets TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $279, collateralized by U.S. Treasury Bond 5.00%, 2037, U.S. Treasury Note 3.13% — 4.63%, 2013 — 2017, value of $285) | ||||||||||||
279 | 0.06%, 10/30/2009 | 279 | ||||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 11/02/2009 in the amount of $256, collateralized by U.S. Treasury Note 1.50%, 2010, value of $259) | ||||||||||||
256 | 0.04%, 10/30/2009 | 256 | ||||||||||
1,090 | ||||||||||||
U.S. Treasury Bills — 0.2% | ||||||||||||
110 | 0.07%, 1/14/2010□¡ | 110 | ||||||||||
Total short-term investments (cost $1,200) | $ | 1,200 | ||||||||||
Total investments (cost $43,363) ▲ | 100.0 | % | $ | 46,832 | ||||||||
Other assets and liabilities | — | % | (19 | ) | ||||||||
Total net assets | 100 .0 | % | $ | 46,813 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $44,301 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 5,919 | ||
Unrealized Depreciation | (3,388 | ) | ||
Net Unrealized Appreciation | $ | 2,531 | ||
• | Currently non-income producing. | |
¡ | 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 October 31, 2009. |
Unrealized | ||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||
S&P Mid 400 Mini | 16 | Long | Dec 2009 | $ | (24 | ) | ||||||
* | The number of contracts does not omit 000’s. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
6
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 45,632 | $ | 45,632 | $ | — | $ | — | ||||||||
Short-Term Investments | 1,200 | — | 1,200 | — | ||||||||||||
Total | $ | 46,832 | $ | 45,632 | $ | 1,200 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 24 | $ | 24 | $ | — | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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. |
7
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $43,363) | $ | 46,832 | ||
Cash | — | |||
Receivables: | ||||
Fund shares sold | 6 | |||
Dividends and interest | 18 | |||
Other assets | 32 | |||
Total assets | 46,888 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 21 | |||
Investment management fees | 6 | |||
Distribution fees | 1 | |||
Variation margin | 28 | |||
Accrued expenses | 19 | |||
Total liabilities | 75 | |||
Net assets | $ | 46,813 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 83,098 | |||
Accumulated undistributed net investment income | 353 | |||
Accumulated net realized loss on investments | (40,083 | ) | ||
Unrealized appreciation of investments | 3,445 | |||
Net assets | $ | 46,813 | ||
Shares authorized | 800,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.69/$8.14 | ||
Shares outstanding | 2,016 | |||
Net assets | $ | 15,507 | ||
Class B: Net asset value per share | $ | 7.54 | ||
Shares outstanding | 270 | |||
Net assets | $ | 2,036 | ||
Class C: Net asset value per share | $ | 7.54 | ||
Shares outstanding | 393 | |||
Net assets | $ | 2,962 | ||
Class Y: Net asset value per share | $ | 7.69 | ||
Shares outstanding | 3,423 | |||
Net assets | $ | 26,308 | ||
8
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 1,117 | ||
Interest | 4 | |||
Securities lending | 16 | |||
Less: Foreign tax withheld | — | |||
Total investment income | 1,137 | |||
Expenses: | ||||
Investment management fees | 314 | |||
Transfer agent fees | 102 | |||
Distribution fees | ||||
Class A | 35 | |||
Class B | 19 | |||
Class C | 26 | |||
Custodian fees | 10 | |||
Accounting services fees | 5 | |||
Registration and filing fees | 43 | |||
Board of Directors’ fees | 3 | |||
Audit fees | 7 | |||
Other expenses | 15 | |||
Total expenses (before waivers and fees paid indirectly) | 579 | |||
Expense waivers | (94 | ) | ||
Transfer agent fee waivers | (46 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (140 | ) | ||
Total expenses, net | 439 | |||
Net Investment Income | 698 | |||
Net Realized Loss on Investments and Other Financial Instruments: | ||||
Net realized loss on investments in securities | (17,829 | ) | ||
Net realized loss on futures | (50 | ) | ||
Net Realized Loss on Investments and Other Financial Instruments | (17,879 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments: | ||||
Net unrealized appreciation of investments | 22,870 | |||
Net unrealized appreciation of futures | 42 | |||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments | 22,912 | |||
Net Gain on Investments and Other Finanical Instruments | 5,033 | |||
Net Increase in Net Assets Resulting from Operations | $ | 5,731 | ||
9
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 698 | $ | 907 | ||||
Net realized loss on investments and other financial instruments | (17,879 | ) | (21,827 | ) | ||||
Net unrealized appreciation (depreciation) of investments and other financial instruments | 22,912 | (15,059 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 5,731 | (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 | (2,232 | ) | (7,322 | ) | ||||
Class B | (350 | ) | (200 | ) | ||||
Class C | (121 | ) | (2,568 | ) | ||||
Class Y | (3,127 | ) | (814 | ) | ||||
Net decrease from capital share transactions | (5,830 | ) | (10,904 | ) | ||||
Net Decrease In Net Assets | (879 | ) | (58,041 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 47,692 | 105,733 | ||||||
End of period | $ | 46,813 | $ | 47,692 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 353 | $ | 511 | ||||
10
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
11
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 may include exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. |
12
• | 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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. To minimize counterparty risk, the 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 October 31, 2009. | ||
e) | 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 October 31, 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 |
13
Notes to Financial Statements — (continued)
October 31, 2009
(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 of the Fund are declared and paid annually. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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) | 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. | ||
h) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||
Equity contracts | Summary of Net Assets — Unrealized depreciation | $ | 24 |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Equity contracts | $ | — | $ | — | $ | (50 | ) | $ | — | $ | — | $ | (50 | ) | ||||||||||
Total | $ | — | $ | — | $ | (50 | ) | $ | — | $ | — | $ | (50 | ) | ||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Equity contracts | — | — | 42 | — | — | $ | 42 | |||||||||||||||||
Total | $ | — | $ | — | $ | 42 | $ | — | $ | — | $ | 42 | ||||||||||||
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. |
14
3. | Futures and Options: |
Futures and Options Transactions — The Fund is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset 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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of October 31, 2009. | |||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. As of October 31, 2009, there were no outstanding purchased or written option contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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. |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
b) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 780 | $ | 6,729 | ||||
Long-Term Capital Gains * | — | 4,429 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 353 | ||
Accumulated Capital Losses * | (39,169 | ) | ||
Unrealized Appreciation † | 2,531 | |||
Total Accumulated Deficit | $ | (36,285 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $76, increase accumulated net realized gain on investments by $81, and decrease paid-in-capital by $5. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 21,002 | ||
2017 | 18,167 | |||
Total | $ | 39,169 | ||
16
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
5. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 year ended October 31, 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% |
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 year ended October 31, 2009, this amount is included in the Statement of Operations. |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.11 | % | 1.28 | % | 1.32 | % | 1.50 | % | 1.54 | %* | ||||||||||
Class B Shares | 1.53 | 1.79 | 2.00 | 2.25 | 2.29 | * | ||||||||||||||
Class C Shares | 1.70 | 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. |
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $43 and contingent deferred sales charges of $5 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $58 for providing such services. These fees are accrued daily and paid monthly. |
18
6. | Investment Transactions: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 45,638 | ||
Sales Proceeds Excluding U.S. Government Obligations | 51,669 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 445 | 37 | (865 | ) | — | (383 | ) | 673 | 369 | (1,867 | ) | — | (825 | ) | ||||||||||||||||||||||||||
Amount | $ | 2,873 | $ | 223 | $ | (5,328 | ) | $ | — | $ | (2,232 | ) | $ | 6,335 | $ | 3,806 | $ | (17,463 | ) | $ | — | $ | (7,322 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 53 | 3 | (114 | ) | — | (58 | ) | 64 | 42 | (139 | ) | — | (33 | ) | ||||||||||||||||||||||||||
Amount | $ | 330 | $ | 16 | $ | (696 | ) | $ | — | $ | (350 | ) | $ | 589 | $ | 424 | $ | (1,213 | ) | $ | — | $ | (200 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 138 | 2 | (160 | ) | — | (20 | ) | 82 | 80 | (443 | ) | — | (281 | ) | ||||||||||||||||||||||||||
Amount | $ | 899 | $ | 11 | $ | (1,031 | ) | $ | — | $ | (121 | ) | $ | 751 | $ | 805 | $ | (4,124 | ) | $ | — | $ | (2,568 | ) | ||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 52 | 88 | (703 | ) | — | (563 | ) | 431 | 573 | (1,429 | ) | — | (425 | ) | ||||||||||||||||||||||||||
Amount | $ | 393 | $ | 524 | $ | (4,044 | ) | $ | — | $ | (3,127 | ) | $ | 4,412 | $ | 5,922 | $ | (11,148 | ) | $ | — | $ | (814 | ) |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 5 | $ | 35 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
10. | Subsequent Events: | |
At a meeting held on November 5, 2009, the Board of Directors of The Hartford Mutual Funds, Inc. approved a Form of Agreement and Plan of Reorganization that provides for the tax-free reorganization of the Fund into The Hartford MidCap Growth Fund, another series of the Company. The reorganization does not require shareholder approval. The reorganization is expected to occur on or about February 19, 2010 or on such date as the officers of the Company determine. | ||
Effective as of the close of business on December 11, 2009, in anticipation of the reorganization, shares of Classes A, B, C, and Y of the 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. | ||
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
20
21
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.70 | $ | 0.11 | $ | — | $ | 0.98 | $ | 1.09 | $ | (0.10 | ) | $ | — | $ | — | $ | (0.10 | ) | $ | 0.99 | $ | 7.69 | ||||||||||||||||||||
B | 6.54 | 0.08 | — | 0.97 | 1.05 | (0.05 | ) | — | — | (0.05 | ) | 1.00 | 7.54 | |||||||||||||||||||||||||||||||
C | 6.53 | 0.06 | — | 0.98 | 1.04 | (0.03 | ) | — | — | (0.03 | ) | 1.01 | 7.54 | |||||||||||||||||||||||||||||||
Y | 6.72 | 0.12 | — | 0.98 | 1.10 | (0.13 | ) | — | — | (0.13 | ) | 0.97 | 7.69 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 11.96 | 0.04 | — | (4.23 | ) | (4.19 | ) | — | (1.23 | ) | — | (1.23 | ) | (5.42 | ) | 6.54 | ||||||||||||||||||||||||||||
C | 11.95 | 0.01 | — | (4.20 | ) | (4.19 | ) | — | (1.23 | ) | — | (1.23 | ) | (5.42 | ) | 6.53 | ||||||||||||||||||||||||||||
Y | 12.21 | 0.14 | — | (4.34 | ) | (4.20 | ) | (0.06 | ) | (1.23 | ) | — | (1.29 | ) | (5.49 | ) | 6.72 | |||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 12.41 | 0.05 | — | 0.21 | 0.26 | — | (0.50 | ) | — | (0.50 | ) | (0.24 | ) | 12.17 | ||||||||||||||||||||||||||||||
B | 12.28 | (0.04 | ) | — | 0.22 | 0.18 | — | (0.50 | ) | — | (0.50 | ) | (0.32 | ) | 11.96 | |||||||||||||||||||||||||||||
C | 12.28 | (0.04 | ) | — | 0.21 | 0.17 | — | (0.50 | ) | — | (0.50 | ) | (0.33 | ) | 11.95 | |||||||||||||||||||||||||||||
Y | 12.40 | 0.03 | — | 0.28 | 0.31 | — | (0.50 | ) | — | (0.50 | ) | (0.19 | ) | 12.21 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.79 | — | — | 1.87 | 1.87 | (0.01 | ) | (0.24 | ) | — | (0.25 | ) | 1.62 | 12.41 | ||||||||||||||||||||||||||||||
B | 10.75 | (0.10 | ) | — | 1.87 | 1.77 | — | (0.24 | ) | — | (0.24 | ) | 1.53 | 12.28 | ||||||||||||||||||||||||||||||
C | 10.75 | (0.09 | ) | — | 1.86 | 1.77 | — | (0.24 | ) | — | (0.24 | ) | 1.53 | 12.28 | ||||||||||||||||||||||||||||||
Y | 10.81 | 0.07 | — | 1.81 | 1.88 | (0.05 | ) | (0.24 | ) | — | (0.29 | ) | 1.59 | 12.40 | ||||||||||||||||||||||||||||||
From (commencement of operations)April 29, 2005, through October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A(e) | 10.00 | — | — | 0.79 | 0.79 | — | — | — | — | 0.79 | 10.79 | |||||||||||||||||||||||||||||||||
B(e) | 10.00 | (0.03 | ) | — | 0.78 | 0.75 | — | — | — | — | 0.75 | 10.75 | ||||||||||||||||||||||||||||||||
C(e) | 10.00 | (0.03 | ) | — | 0.78 | 0.75 | — | — | — | — | 0.75 | 10.75 | ||||||||||||||||||||||||||||||||
Y(e) | 10.00 | 0.02 | — | 0.79 | 0.81 | — | — | — | — | 0.81 | 10.81 |
(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) | Commenced operations on April 29, 2005. | |
(f) | Not annualized. | |
(g) | Annualized. |
22
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||||
Net Assets at End | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio | |||||||||||||||||||||||
Total Return(b) | of Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Turnover Rate(d) | ||||||||||||||||||||||
16.60 | % | $ | 15,507 | 1.69 | % | 1.11 | % | 1.11 | % | 1.61 | % | 111 | % | |||||||||||||||
16.28 | 2,036 | 2.77 | 1.53 | 1.53 | 1.19 | — | ||||||||||||||||||||||
16.00 | 2,962 | 2.59 | 1.70 | 1.70 | 0.98 | — | ||||||||||||||||||||||
16.95 | 26,308 | 0.95 | 0.90 | 0.90 | 1.82 | — | ||||||||||||||||||||||
(38.30 | ) | 16,071 | 1.44 | 1.28 | 1.28 | 0.95 | 194 | |||||||||||||||||||||
(38.65 | ) | 2,147 | 2.43 | 1.79 | 1.79 | 0.43 | — | |||||||||||||||||||||
(38.68 | ) | 2,695 | 2.25 | 1.97 | 1.97 | 0.26 | — | |||||||||||||||||||||
(38.03 | ) | 26,779 | 0.88 | 0.88 | 0.88 | 1.34 | — | |||||||||||||||||||||
2.16 | 39,238 | 1.42 | 1.33 | 1.33 | 0.38 | 209 | ||||||||||||||||||||||
1.51 | 4,322 | 2.35 | 2.01 | 2.01 | (0.29 | ) | — | |||||||||||||||||||||
1.42 | 8,300 | 2.17 | 2.07 | 2.07 | (0.36 | ) | — | |||||||||||||||||||||
2.58 | 53,873 | 0.84 | 0.83 | 0.83 | 0.83 | — | ||||||||||||||||||||||
17.66 | 47,937 | 1.69 | 1.55 | 1.55 | (0.10 | ) | 63 | |||||||||||||||||||||
16.79 | 4,137 | 2.67 | 2.30 | 2.30 | (0.84 | ) | — | |||||||||||||||||||||
16.79 | 7,417 | 2.53 | 2.30 | 2.30 | (0.84 | ) | — | |||||||||||||||||||||
17.79 | 20,025 | 1.33 | 1.15 | 1.15 | 0.26 | — | ||||||||||||||||||||||
7.90 | (f) | 22,423 | 1.67 | (g) | 1.55 | (g) | 1.55 | (g) | (0.08 | )(g) | 30 | |||||||||||||||||
7.50 | (f) | 1,714 | 2.64 | (g) | 2.30 | (g) | 2.30 | ��(g) | (0.92 | )(g) | — | |||||||||||||||||
7.50 | (f) | 2,885 | 2.53 | (g) | 2.30 | (g) | 2.30 | (g) | (0.96 | )(g) | — | |||||||||||||||||
8.10 | (f) | 541 | 1.36 | (g) | 1.15 | (g) | 1.15 | (g) | 0.37 | (g) | — |
23
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
24
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity.
Ms. Jaffee served as Chairman (2008–2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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.
25
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.
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. 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). |
Mr. Arena serves as Executive Vice President of Hartford Life. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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.
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005.
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 from 2005 – 2006.
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 – 2009.
26
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987.
Mr. Sloane is a Senior Vice President of Hartford Life. 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.
27
DRD* | 100.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.095 | N/A | N/A | 0.095 | ||||||||||||
Class B | 0.051 | N/A | N/A | 0.051 | ||||||||||||
Class C | 0.027 | N/A | N/A | 0.027 | ||||||||||||
Class Y | 0.131 | N/A | N/A | 0.131 |
28
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,218.70 | $ | 6.43 | $ | 1,000.00 | $ | 1,019.41 | $ | 5.85 | 1 .15 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,218.10 | $ | 9.00 | �� | $ | 1,000.00 | $ | 1,017.09 | $ | 8.19 | 1 .61 | 184 | 365 | |||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,216.10 | $ | 9.89 | $ | 1,000.00 | $ | 1,016.28 | $ | 9.00 | 1 .77 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,222.60 | $ | 5.04 | $ | 1,000.00 | $ | 1,020.67 | $ | 4.58 | 0 .90 | 184 | 365 |
29
30
31
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
32
33
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
11 | ||||
12 | ||||
13 | ||||
14 | ||||
15 | ||||
24 | ||||
26 | ||||
27 | ||||
29 | ||||
29 | ||||
30 | ||||
31 | ||||
32 |
The Hartford Select SmallCap Value Fund inception 07/31/2006 | ||||
(subadvised by: | Kayne Anderson Rudnick Investment Management, LLC | Investment objective – Seeks capital appreciation. | ||
Metropolitan West Capital Management, LLC | ||||
SSgA Funds Management, Inc. |
Growth of a $10,000 investment in Class A which includes Sales Charge
7/01 01 / 0 / 1 0 / 1 0 / Select SmallCap Value A Russell 2000 Value Index $9,450 starting value $10,000 starting value (2) $8,212 ending value $7,898 ending value |
1 | Since | |||||||
Year | Inception | |||||||
Select SmallCap Value A# | 8.28 | % | -4.22 | % | ||||
Select SmallCap Value A## | 2.32 | % | -5.87 | % | ||||
Select SmallCap Value B# | 7.74 | % | -4.95 | % | ||||
Select SmallCap Value B## | 2.74 | % | -5.78 | % | ||||
Select SmallCap Value C# | 7.66 | % | -4.94 | % | ||||
Select SmallCap Value C## | 6.66 | % | -4.94 | % | ||||
Select SmallCap Value Y# | 8.85 | % | -3.90 | % | ||||
Russell 2000 Value Index | 1.96 | % | -6.99 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
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
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 0.7 | % | ||
Banks (Financials) | 7.5 | |||
Capital Goods (Industrials) | 10.1 | |||
Commercial & Professional Services (Industrials) | 8.2 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 4.0 | |||
Consumer Services (Consumer Discretionary) | 3.4 | |||
Consumer Staples (Industrials) | 0.0 | |||
Diversified Financials (Financials) | 5.5 | |||
Energy (Energy) | 6.7 | |||
Food & Staples Retailing (Consumer Staples) | 0.1 | |||
Food, Beverage & Tobacco (Consumer Staples) | 1.9 | |||
Health Care Equipment & Services (Health Care) | 7.0 | |||
Household & Personal Products (Consumer Staples) | 2.6 | |||
Insurance (Financials) | 4.4 | |||
Materials (Materials) | 3.4 | |||
Media (Consumer Discretionary) | 0.4 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 2.2 | |||
Real Estate (Financials) | 4.7 | |||
Retailing (Consumer Discretionary) | 2.6 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 1.6 | |||
Software & Services (Information Technology) | 7.2 | |||
Technology Hardware & Equipment (Information Technology) | 5.2 | |||
Telecommunication Services (Services) | 0.7 | |||
Transportation (Industrials) | 3.3 | |||
Utilities (Utilities) | 2.8 | |||
Short-Term Investments | 3.7 | |||
Other Assets and Liabilities | 0.1 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.7% | ||||||||
Automobiles & Components — 0.7% | ||||||||
5 | Dana Holding Corp. • | $ | 26 | |||||
6 | Modine Manufacturing Co. | 66 | ||||||
12 | Spartan Motors, Inc. | 61 | ||||||
1 | Standard Motor Products | 7 | ||||||
2 | Stoneridge, Inc. • | 11 | ||||||
1 | Superior Industries International | 12 | ||||||
2 | Tenneco Automotive, Inc. • | 22 | ||||||
16 | Thor Industries, Inc. | 406 | ||||||
611 | ||||||||
Banks — 7.0% | ||||||||
1 | Alliance Financial Corp. | 17 | ||||||
— | Ames National Corp. | 6 | ||||||
2 | Arrow Financial Corp. | 50 | ||||||
— | Astoria Financial Corp. | 3 | ||||||
4 | Banco Latinoamericano de Exportaciones S.A. ADR Class E | 62 | ||||||
— | Bank of Marin Bancorp | 5 | ||||||
1 | Bank of the Ozarks, Inc. | 18 | ||||||
3 | Bankfinancial Corp. | 31 | ||||||
— | Bar HBR Bancshares | 3 | ||||||
— | Bridge Bancorp, Inc. | 4 | ||||||
— | Brooklyn Federal Bancorp, Inc. | 5 | ||||||
1 | Bryn Mawr Bank Corp. | 19 | ||||||
2 | Camden National Corp. | 60 | ||||||
76 | Cathay General Bancorp | 671 | ||||||
— | Century Bancorp, Inc. | 4 | ||||||
2 | Chemical Financial Corp. | 48 | ||||||
2 | Citizens & Northern Corp. | 27 | ||||||
— | Citizens Holdings Co. | 3 | ||||||
60 | Citizens Republic Bancorp, Inc. • | 36 | ||||||
2 | City Holding Co. | 71 | ||||||
2 | Clifton Savings Bancorp, Inc. | 19 | ||||||
1 | CNB Financial Corp. | 8 | ||||||
1 | Community Bank System, Inc. | 11 | ||||||
1 | Community Trust Bancorp, Inc. | 12 | ||||||
71 | CVB Financial Corp. | 569 | ||||||
5 | Dime Community Bancshares | 51 | ||||||
3 | East West Bancorp, Inc. | 23 | ||||||
— | ESB Financial Corp. | 5 | ||||||
1 | Farmers Capital Bank Corp. | 11 | ||||||
— | Financial Institutions | 3 | ||||||
2 | First Bancorp North Carolina | 28 | ||||||
1 | First Bancorp, Inc. | 20 | ||||||
3 | First Commonwealth Financial Corp. | 16 | ||||||
— | First Community Bancshares | 6 | ||||||
1 | First Defiance Financial Corp. | 9 | ||||||
— | First Financial Bankshares, Inc. | 10 | ||||||
1 | First Financial Holdings | 17 | ||||||
6 | First Financial Northwest | 36 | ||||||
1 | First Long Island Corp. | 13 | ||||||
8 | FirstMerit Corp. | 143 | ||||||
2 | Flushing Financial Corp. | 18 | ||||||
16 | FNB Corp. | 110 | ||||||
5 | Fox Chase Bancorp, Inc. • | 46 | ||||||
— | German American Bancorp, Inc. | 6 | ||||||
4 | Glacier Bancorp | 50 | ||||||
2 | Great Southern Bancorp, Inc. | 53 | ||||||
1 | Hancock Holding Co. | 43 | ||||||
— | Home Bancorp, Inc. • | 2 | ||||||
1 | Home Bancshares, Inc. | 26 | ||||||
— | Iberiabank Corp. | 9 | ||||||
40 | International Bancshares Corp. | 594 | ||||||
4 | Investors Bancorp, Inc. • | 39 | ||||||
4 | Kearny Financial Corp. | 43 | ||||||
5 | Lakeland Bancorp, Inc. | 33 | ||||||
1 | Lakeland Financial Corp. | 27 | ||||||
2 | MainSource Financial Group, Inc. | 10 | ||||||
— | MB Financial, Inc. | 5 | ||||||
— | Merchants Bancshares | 7 | ||||||
1 | MGIC Investment Corp. • | 6 | ||||||
— | NASB Financial, Inc. | 10 | ||||||
1 | National Bankshares, Inc. | 14 | ||||||
10 | National Penn Bancshares, Inc. | 54 | ||||||
4 | NBT Bancorp | 81 | ||||||
2 | Newalliance Bancs | 20 | ||||||
2 | Northfield Bancorp, Inc. | 27 | ||||||
4 | Oceanfirst Financial Corp. | 33 | ||||||
1 | Ocwen Financial Corp. • | 15 | ||||||
— | Ohio Valley Banccorp | 3 | ||||||
4 | Old National Bankcorp | 36 | ||||||
6 | Oriental Financial Group, Inc. | 66 | ||||||
— | Orrstown Financial Services, Inc. | 8 | ||||||
15 | Pacific Capital Bancorp | 20 | ||||||
— | Park National Corp. | 23 | ||||||
1 | Peapack-Gladstone Financial | 17 | ||||||
2 | Peoples Bancorp, Inc. | 20 | ||||||
2 | Prosperity Bancshares, Inc. | 59 | ||||||
3 | Provident Financial Services, Inc. | 33 | ||||||
4 | Renasant Corp. | 51 | ||||||
3 | Republic Bancorp, Inc. | 57 | ||||||
— | Rockville Financial, Inc. | 3 | ||||||
3 | S&T Bancorp, Inc. | 42 | ||||||
1 | S.Y. Bancorp, Inc. | 27 | ||||||
4 | Santander Bancorp • | 40 | ||||||
1 | SCBT Financial Corp. | 26 | ||||||
1 | Simmons First National Corp. | 41 | ||||||
3 | Southside Bancshares, Inc. | 65 | ||||||
— | State Bancorp, Inc. | 3 | ||||||
3 | Sterling Bancorp NY | 17 | ||||||
8 | Sterling Bancshares, Inc. | 44 | ||||||
11 | Suffolk Bancorp | 298 | ||||||
— | SVB Financial Group • | 19 | ||||||
99 | Synovus Financial Corp. | 220 | ||||||
2 | Towne Bank | 29 | ||||||
2 | Trustco Bank Corp. | 11 | ||||||
6 | Trustmark Corp. | 116 | ||||||
66 | UCBH Holdings, Inc. | 65 | ||||||
3 | UMB Financial Corp. | 110 | ||||||
3 | United Bankshares, Inc. | 45 | ||||||
3 | United Financial Bancorp, Inc. | 39 | ||||||
2 | Univest Corp. | 31 | ||||||
1 | Washington Trust Bancorp | 8 | ||||||
6 | Webster Financial Corp. | 68 | ||||||
— | Westamerica Banco | 5 | ||||||
44 | Zion Bancorp | 623 | ||||||
5,922 | ||||||||
Capital Goods — 10.1% | ||||||||
— | AAR Corp. • | 4 |
4
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.7% — (continued) | ||||||||
Capital Goods — 10.1% — (continued) | ||||||||
1 | Actuant Corp. Class A | $ | 17 | |||||
1 | Aircastle Ltd. | 10 | ||||||
1 | Albany International Corp. Class A | 17 | ||||||
4 | American Rail Car Industries, Inc. | 38 | ||||||
— | Ameron International Corp. | 9 | ||||||
15 | AMETEK, Inc. | 523 | ||||||
6 | Apogee Enterprises | 82 | ||||||
1 | Applied Industrial Technologies, Inc. | 14 | ||||||
1 | Arfon, Inc. • | 21 | ||||||
2 | Baldor Electric Co. | 52 | ||||||
7 | Barnes Group, Inc. | 118 | ||||||
4 | Beacon Roofing Supply, Inc. • | 64 | ||||||
1 | Belden, Inc. | 21 | ||||||
2 | Brady Corp. Class A | 57 | ||||||
6 | Ceradyne, Inc. • | 93 | ||||||
1 | Chart Industries, Inc. • | 21 | ||||||
3 | CIRCOR International, Inc. | 70 | ||||||
30 | Clarcor, Inc. | 895 | ||||||
4 | Colfax Corp. • | 41 | ||||||
1 | Columbus McKinnon Corp. • | 9 | ||||||
10 | Comfort Systems USA, Inc. | 104 | ||||||
3 | Ducommun, Inc. | 44 | ||||||
9 | Dycom Industries, Inc. • | 93 | ||||||
6 | DynCorp International, Inc. • | 104 | ||||||
1 | Encore Wire Corp. | 24 | ||||||
8 | EnerSys • | 182 | ||||||
4 | Enpro Industries, Inc. • | 92 | ||||||
7 | Federal Signal Corp. | 41 | ||||||
2 | Flow International Corp. • | 5 | ||||||
— | Franklin Electric Co., Inc. | 5 | ||||||
1 | Freighter America, Inc. | 23 | ||||||
1 | Gibralter Industries, Inc. | 13 | ||||||
22 | Graco, Inc. | 611 | ||||||
13 | GrafTech International Ltd. • | 176 | ||||||
— | Graham Corp. | 3 | ||||||
3 | Granite Construction, Inc. | 72 | ||||||
4 | Greenbrier Cos. | 31 | ||||||
4 | Griffon Corp. • | 38 | ||||||
7 | H & E Equipment Services, Inc. • | 77 | ||||||
35 | Hexcel Corp. • | 385 | ||||||
35 | Huttig Building Products, Inc. ⌂ • | 23 | ||||||
3 | Interline Brands, Inc. • | 51 | ||||||
6 | John Bean Technologies Corp. | 97 | ||||||
3 | Kadant, Inc. • | 45 | ||||||
1 | L.B. Foster Co. Class A • | 25 | ||||||
— | Layne Christensen Co. • | 8 | ||||||
25 | Lincoln Electric Holdings, Inc. | 1,200 | ||||||
4 | Mueller Industries, Inc. | 90 | ||||||
15 | Mueller Water Products, Inc. | 68 | ||||||
— | Nacco Industries, Inc. Class A | 12 | ||||||
1 | Nordson Corp. | 42 | ||||||
48 | Pike Electric Corp. • | 598 | ||||||
5 | Robbins & Myers, Inc. | 122 | ||||||
20 | Roper Industries, Inc. | 991 | ||||||
5 | SauerDanfoss, Inc. | 37 | ||||||
1 | Standex International | 17 | ||||||
2 | Sterling Construction Co., Inc. • | 39 | ||||||
3 | TAL International Group, Inc. | 30 | ||||||
7 | Tredegar Corp. | 91 | ||||||
2 | Trimas Corp. • | 7 | ||||||
2 | Triumph Group, Inc. | 72 | ||||||
1 | Tutor Perini Corp. • | 13 | ||||||
2 | Twin Disc, Inc. | 14 | ||||||
3 | United Rentals, Inc. • | 28 | ||||||
12 | Wabtec Corp. | 441 | ||||||
8,460 | ||||||||
Commercial & Professional Services — 8.2% | ||||||||
66 | ABM Industries, Inc. | 1,239 | ||||||
20 | ATC Technology Corp. • | 414 | ||||||
1 | CDI Corp. | 17 | ||||||
2 | Consolidated Graphics, Inc. • | 31 | ||||||
24 | Copart, Inc. • | 772 | ||||||
1 | Cornell Companies, Inc. • | 30 | ||||||
2 | Courier Corp. | 35 | ||||||
1 | Deluxe Corp. | 16 | ||||||
1 | EnergySolutions, Inc. | 6 | ||||||
— | First Advantage Corp. • | 5 | ||||||
15 | FTI Consulting, Inc. • | 612 | ||||||
2 | G & K Services, Inc. Class A | 44 | ||||||
2 | GP Strategies Corp. • | 17 | ||||||
7 | Heidrick & Struggles International, Inc. | 200 | ||||||
1 | HNI Corp. | 26 | ||||||
4 | Kelly Services, Inc. | 47 | ||||||
55 | McGrath RentCorp | 1,090 | ||||||
5 | On Assignment, Inc. • | 33 | ||||||
23 | Resources Connection, Inc. • | 389 | ||||||
25 | School Specialty, Inc. • | 556 | ||||||
40 | Schwak, Inc. | 393 | ||||||
6 | Spherion Corp. • | 31 | ||||||
4 | Standard Register Co. | 19 | ||||||
15 | United Stationers, Inc. • | 683 | ||||||
1 | Viad Corp. | 22 | ||||||
8 | Waste Services, Inc. • | 56 | ||||||
2 | Watson Wyatt Worldwide, Inc. | 81 | ||||||
6,864 | ||||||||
Consumer Durables & Apparel — 4.0% | ||||||||
4 | American Greetings Corp. Class A | 83 | ||||||
1 | Beazer Homes USA, Inc. • | 3 | ||||||
1 | Blyth, Inc. | 51 | ||||||
3 | Brunswick Corp. | 32 | ||||||
3 | Carter’s, Inc. • | 74 | ||||||
30 | Cherokee, Inc. | 570 | ||||||
7 | Crocs, Inc. • | 44 | ||||||
— | CSS Industries, Inc. | 6 | ||||||
27 | Eastman Kodak Co. | 101 | ||||||
2 | Hooker Furniture Corp. | 31 | ||||||
1 | Iconix Brand Group, Inc. • | 11 | ||||||
2 | Jones Apparel Group, Inc. | 35 | ||||||
9 | Liz Claiborne, Inc. | 53 | ||||||
1 | Meritage Homes Corp. • | 18 | ||||||
4 | Oxford Industries, Inc. | 84 | ||||||
2 | Perry Ellis International • | 29 | ||||||
15 | Quiksilver, Inc. • | 29 | ||||||
35 | RC2 Corp. • | 452 | ||||||
2 | Ryland Group, Inc. | 46 | ||||||
10 | Sturm Ruger & Co., Inc. | 104 | ||||||
54 | Tempur-Pedic International, Inc. • | 1,044 | ||||||
6 | Timberland Co. Class A • | 100 | ||||||
1 | Universal Electronics, Inc. • | 10 | ||||||
23 | Volcom, Inc. • | 382 | ||||||
3,392 | ||||||||
5
Schedule of Investments – (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.7% — (continued) | ||||||||
Consumer Services — 3.4% | ||||||||
1 | Benihana, Inc. • | $ | 3 | |||||
6 | Bob Evans Farms, Inc. | 147 | ||||||
38 | Burger King Holdings, Inc. | 652 | ||||||
— | Churchill Downs, Inc. | 12 | ||||||
1 | Domino’s Pizza, Inc. • | 7 | ||||||
— | Frischs Restaurants, Inc. | 2 | ||||||
3 | Gaylord Entertainment Co. • | 43 | ||||||
3 | Great Wolf Resorts, Inc. • | 9 | ||||||
1 | Interval Leisure Group, Inc. • | 10 | ||||||
1 | Life Time Fitness, Inc. • | 23 | ||||||
— | Marcus Corp. | 3 | ||||||
31 | Matthews International Corp. Class A | 1,124 | ||||||
3 | Multimedia Games, Inc. • | 13 | ||||||
5 | O’ Charley’s, Inc. • | 34 | ||||||
17 | Papa John’s International, Inc. • | 382 | ||||||
4 | Pinnacle Entertainment, Inc. • | 30 | ||||||
2 | Red Lion Hotels Corp. • | 10 | ||||||
1 | Red Robin Gourmet Burgers, Inc. • | 23 | ||||||
6 | Regis Corp. | 93 | ||||||
5 | Ruth’s Hospitality Group, Inc. • | 16 | ||||||
2 | Speedway Motorsports, Inc. | 22 | ||||||
3 | Steiner Leisure Ltd. • | 103 | ||||||
5 | Stewart Enterprises, Inc. | 22 | ||||||
1 | Vail Resorts, Inc. • | 38 | ||||||
2,821 | ||||||||
Consumer Staples — 0.0% | ||||||||
— | Seaboard Corp. | 15 | ||||||
Diversified Financials — 5.5% | ||||||||
10 | Advance America Cash Advance Centers, Inc. | 50 | ||||||
25 | Allied Capital Corp. | 77 | ||||||
11 | Apollo Investment Corp. | 101 | ||||||
148 | Ares Capital Corp. | 1,544 | ||||||
2 | Blackrock Kelso Capital Corp. | 13 | ||||||
1 | Calamos Asset Management, Inc. | 14 | ||||||
1 | Cardtronics, Inc. • | 11 | ||||||
3 | Cash America International, Inc. | 76 | ||||||
6 | Compass Diversified Holdings | 58 | ||||||
— | Credit Acceptance Corp. • | 10 | ||||||
57 | E*Trade Financial Corp. • | 84 | ||||||
1 | Encore Capital Group, Inc. • | 15 | ||||||
44 | Federated Investors, Inc. | 1,155 | ||||||
4 | Fifth Street Finance Corp. | 42 | ||||||
29 | Financial Federal Corp. | 588 | ||||||
1 | Gladstone Capital Corp. | 5 | ||||||
7 | Hercules Technology Growth | 70 | ||||||
1 | Kayne Anderson Energy Development Co. | 8 | ||||||
5 | Knight Capital Group, Inc. • | 90 | ||||||
8 | LaBranche & Co., Inc. • | 22 | ||||||
8 | MCG Capital Corp. • | 32 | ||||||
3 | MF Global Ltd. • | 24 | ||||||
2 | Oppenheimer Holdings Class A | 38 | ||||||
4 | PennantPark Investment Corp. | 31 | ||||||
2 | Penson Worldwide, Inc. • | 21 | ||||||
7 | PHH Corp. • | 105 | ||||||
— | Piper Jaffray Cos. • | 9 | ||||||
3 | Prospect Capital Corp. | 27 | ||||||
12 | Raymond James Financial, Inc. | 294 | ||||||
1 | TradeStation Group, Inc. • | 11 | ||||||
2 | Virtus Investment Partners, Inc. • | 24 | ||||||
— | World Acceptance Corp. • | 9 | ||||||
4,658 | ||||||||
Energy — 6.7% | ||||||||
1 | Approach Resources, Inc. • | 5 | ||||||
1 | Atlas Energy, Inc. | 16 | ||||||
6 | ATP Oil & Gas Corp. • | 99 | ||||||
4 | Basic Energy Services, Inc. • | 31 | ||||||
1 | Berry Petroleum Co. | 35 | ||||||
4 | Bill Barrett Corp. • | 119 | ||||||
1 | Bristow Group, Inc. • | 38 | ||||||
15 | Cal Dive International, Inc. • | 117 | ||||||
31 | Carbo Ceramics, Inc. | 1,816 | ||||||
6 | Complete Production Services, Inc. • | 62 | ||||||
1 | Contango Oil & Gas Co. • | 24 | ||||||
4 | Crosstex Energy, Inc. | 21 | ||||||
6 | CVR Energy, Inc. • | 64 | ||||||
6 | Delek U.S. Holdings, Inc. | 40 | ||||||
11 | DHT Maritime, Inc. | 39 | ||||||
1 | Goodrich Petroleum Corp. • | 33 | ||||||
13 | Gran Tierra Energy Corp. • | 64 | ||||||
13 | Hercules Offshore, Inc. • | 66 | ||||||
2 | Hornbeck Offshore Services, Inc. • | 41 | ||||||
7 | International Coal Group, Inc. • | 28 | ||||||
21 | ION Geophysical Corp. • | 81 | ||||||
13 | Key Energy Services, Inc. • | 94 | ||||||
— | Lufkin Industries, Inc. | 19 | ||||||
13 | Matrix Service Co. • | 111 | ||||||
1 | Newpark Resources, Inc. • | 2 | ||||||
8 | Oceaneering International, Inc. • | 383 | ||||||
6 | Parker Drilling Co. • | 31 | ||||||
6 | Petroleum Development Corp. • | 94 | ||||||
6 | Pioneer Drilling Co. • | 39 | ||||||
4 | Rex Energy Corp. • | 32 | ||||||
43 | TETRA Technologies, Inc. • | 404 | ||||||
3 | TGC Industries, Inc. • | 14 | ||||||
4 | Union Drilling, Inc. • | 32 | ||||||
5 | Vaalco Energy, Inc. | 22 | ||||||
12 | Western Refining, Inc. • | 67 | ||||||
1 | Westmoreland Coal Co. • | 8 | ||||||
29 | World Fuel Services Corp. | 1,459 | ||||||
5,650 | ||||||||
Food & Staples Retailing — 0.1% | ||||||||
— | Great Atlantic & Pacific Tea Co., Inc. • | 2 | ||||||
3 | Pantry, Inc. • | 37 | ||||||
3 | Susser Holdings • | 36 | ||||||
2 | Winn-Dixie Stores, Inc. • | 22 | ||||||
97 | ||||||||
Food, Beverage & Tobacco — 1.9% | ||||||||
1 | American Italian Pasta Co. • | 16 | ||||||
18 | B&G Foods, Inc. Class A | 140 | ||||||
3 | Chiquita Brands International, Inc. • | 43 | ||||||
20 | Flowers Foods, Inc. | 455 | ||||||
9 | J&J Snack Foods Corp. | 333 | ||||||
8 | Ralcorp Holdings, Inc. • | 443 | ||||||
— | Seneca Foods Corp. • | 11 | ||||||
4 | Universal Corp. | 184 | ||||||
1,625 | ||||||||
6
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.7% — (continued) | ||||||||
Health Care Equipment & Services — 7.0% | ||||||||
1 | Alliance Healthcare Services, Inc. • | $ | 7 | |||||
3 | Allied Healthcare International • | 7 | ||||||
9 | Amedisys, Inc. • | 346 | ||||||
1 | American Dental Partners, Inc. • | 13 | ||||||
51 | AMN Healthcare Services, Inc. • | 420 | ||||||
2 | AmSurg Corp. • | 52 | ||||||
— | Analogic Corp. | 5 | ||||||
2 | Cantel Medical Corp. • | 31 | ||||||
2 | Cardiac Science Corp. • | 6 | ||||||
5 | Centene Corp. • | 86 | ||||||
10 | Chemed Corp. | 453 | ||||||
16 | Cooper Co., Inc. | 440 | ||||||
7 | Emergency Medical Services • | 322 | ||||||
— | Gentiva Health Services, Inc. • | 9 | ||||||
1 | Greatbatch, Inc. • | 18 | ||||||
7 | Healthspring, Inc. • | 94 | ||||||
8 | ICU Medical, Inc. • | 271 | ||||||
7 | Invacare Corp. | 159 | ||||||
4 | inVentiv Health, Inc. • | 68 | ||||||
8 | Kindred Healthcare, Inc. • | 120 | ||||||
18 | Landauer, Inc. | 937 | ||||||
2 | Magellan Health Services, Inc. • | 53 | ||||||
2 | MedCath Corp. • | 16 | ||||||
1 | Molina Healthcare, Inc. • | 9 | ||||||
7 | NightHawk Radiology Holdings, Inc. • | 45 | ||||||
4 | Novamed, Inc. • | 15 | ||||||
30 | Owens & Minor, Inc. | 1,231 | ||||||
4 | Rehabcare Group, Inc. • | 68 | ||||||
2 | Res-Care, Inc. • | 18 | ||||||
1 | Skilled Healthcare Group • | 11 | ||||||
1 | Sun Healthcare Group, Inc. • | 7 | ||||||
2 | Symmetry Medical, Inc. • | 14 | ||||||
3 | Tomotherapy, Inc. • | 10 | ||||||
3 | Triple-S Management Corp., Class B • | 44 | ||||||
1 | U.S. Physical Therapy, Inc. • | 8 | ||||||
2 | Wellcare Health Plans, Inc. • | 39 | ||||||
21 | Young Innovations, Inc. | 499 | ||||||
5,951 | ||||||||
Household & Personal Products — 2.6% | ||||||||
5 | Central Garden & Pet Co. Class A • | 46 | ||||||
16 | Chattem, Inc. • | 1,027 | ||||||
1 | Inter Parfums, Inc. | 17 | ||||||
8 | Prestige Brands Holdings, Inc. • | 57 | ||||||
1 | Schiff Nutrition International | 3 | ||||||
33 | WD40 Co. | 1,049 | ||||||
2,199 | ||||||||
Insurance — 4.4% | ||||||||
8 | American Equity Investment Life Holding Co. | 54 | ||||||
1 | Amerisafe, Inc. • | 26 | ||||||
6 | Amtrust Financial Services | 66 | ||||||
2 | Argo Group International Holdings Ltd. • | 82 | ||||||
3 | Assured Guaranty Ltd. | 45 | ||||||
3 | CNA Surety Corp. • | 37 | ||||||
20 | Conseco, Inc. • | 106 | ||||||
3 | Delphi Financial Group Class A | 75 | ||||||
6 | Employers Holdings, Inc. | 94 | ||||||
3 | FBL Financial Group Class A | 54 | ||||||
5 | First Mercury Financial Corp. | 57 | ||||||
5 | Flagstone Reinsurance Holdings | 55 | ||||||
5 | Greenlight Capital Re Ltd. Class A • | 86 | ||||||
2 | Hallmark Financial Services, Inc. • | 17 | ||||||
2 | Harleysville Group, Inc. | 76 | ||||||
40 | Horace Mann Educators Corp. | 491 | ||||||
2 | Infinity Property & Casualty Corp. | 60 | ||||||
10 | Maiden Holdings Ltd. | 70 | ||||||
5 | Max Capital Group Ltd. | 97 | ||||||
2 | Meadowbrook Insurance Group, Inc. | 15 | ||||||
8 | Montpelier Re Holdings Ltd. | 135 | ||||||
4 | National Financial Partners Corp. | 31 | ||||||
— | Navigators Group, Inc. • | 11 | ||||||
15 | Phoenix Cos. | 46 | ||||||
5 | Platinum Underwriters Holdings Ltd. | 161 | ||||||
3 | PMA Capital Corp. Class A • | 14 | ||||||
3 | ProAssurance Corp. • | 145 | ||||||
18 | RLI Corp. | 898 | ||||||
2 | Safety Insurance Group, Inc. | 68 | ||||||
2 | Seabright Insurance Holdings • | 22 | ||||||
35 | Selective Insurance Group | 536 | ||||||
— | Zenith National Insurance Corp. | 14 | ||||||
3,744 | ||||||||
Materials — 3.4% | ||||||||
7 | A. Schulman, Inc. | 125 | ||||||
1 | Ampal-American Israel Corp. Class A • | 3 | ||||||
17 | Balchem Corp. | 469 | ||||||
1 | Brush Engineered Materials, Inc. • | 14 | ||||||
5 | Buckeye Technologies, Inc. • | 49 | ||||||
3 | BWAY Holding Co. • | 50 | ||||||
1 | Century Aluminum Co. • | 10 | ||||||
1 | Coeur d’Alene Mines Corp. • | 16 | ||||||
3 | Domtar Corp. • | 116 | ||||||
52 | Glatfelter | 547 | ||||||
5 | Graphic Packaging Holding Co. • | 10 | ||||||
1 | H.B. Fuller Co. | 13 | ||||||
1 | Hawkins, Inc. | 23 | ||||||
4 | Headwaters, Inc. • | 17 | ||||||
10 | Hecla Mining Co. • | 42 | ||||||
5 | Horsehead Holding Corp. • | 51 | ||||||
2 | Innospec, Inc. | 19 | ||||||
2 | Koppers Holdings, Inc. | 61 | ||||||
1 | Minerals Technologies, Inc. | 69 | ||||||
2 | Myers Industries | 19 | ||||||
21 | Neenah Paper, Inc. | 212 | ||||||
9 | Olin Corp. | 133 | ||||||
4 | OM Group, Inc. • | 102 | ||||||
25 | PolyOne Corp. • | 138 | ||||||
1 | RTI International Metals, Inc. • | 23 | ||||||
3 | Schweitzer-Mauduit International, Inc. | 138 | ||||||
6 | Sensient Technologies Corp. | 152 | ||||||
3 | Solutia, Inc. • | 36 | ||||||
9 | Spartech Corp. | 82 | ||||||
5 | Stillwater Mining Co. • | 29 | ||||||
1 | Universal Stainless & Alloy Products • | 20 | ||||||
1 | W.R. Grace & Co. • | 33 | ||||||
7 | Worthington Industries, Inc. | 74 | ||||||
2,895 | ||||||||
Media — 0.4% | ||||||||
3 | Belo Corp. Class A | 15 | ||||||
3 | Crown Media Holdings, Inc. • | 5 | ||||||
6 | Harte-Hanks, Inc. | 75 | ||||||
6 | Journal Communications, Inc. | 21 |
7
Schedule of Investments – (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - - 95.7% — (continued) | ||||||||
Media — 0.4% — (continued) | ||||||||
2 | Knology, Inc. • | $ | 17 | |||||
2 | Lin TV Corp. • | 6 | ||||||
6 | LodgeNet Interactive Corp. • | 28 | ||||||
15 | Mediacom Communications Corp. • | 73 | ||||||
4 | National Cinemedia, Inc. | 56 | ||||||
296 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 2.2% | ||||||||
3 | Albany Molecular Research, Inc. • | 25 | ||||||
5 | Bio-Rad Laboratories, Inc. Class A • | 438 | ||||||
2 | Celera Corp. • | 14 | ||||||
16 | Charles River Laboratories International, Inc. • | 566 | ||||||
12 | Covance, Inc. • | 620 | ||||||
1 | Facet Biotech Corp. • | 24 | ||||||
11 | KV Pharmaceutical Co. • | 44 | ||||||
— | Martek Biosciences Corp. • | 2 | ||||||
4 | Maxygen, Inc. • | 22 | ||||||
1 | ViroPharma, Inc. • | 9 | ||||||
1,764 | ||||||||
Real Estate — 4.7% | ||||||||
1 | American Campus Communities, Inc. | 27 | ||||||
14 | Anworth Mortgage Asset Corp. | 102 | ||||||
18 | Ashford Hospitality | 70 | ||||||
5 | Associated Estates Realty | 44 | ||||||
2 | Biomed Realty Trust, Inc. | 23 | ||||||
19 | CapLease, Inc. | 63 | ||||||
6 | Capstead Mortgage Corp. | 84 | ||||||
9 | CBL & Associates Properties | 73 | ||||||
5 | Cedar Shopping Court | 31 | ||||||
8 | Colonial Properties Trust | 84 | ||||||
10 | DCT Industrial Trust, Inc. | 46 | ||||||
9 | Developers Diversified Realty Corp. | 79 | ||||||
13 | Diamondrock Hospitality | 100 | ||||||
4 | DuPont Fabros Technology, Inc. | 66 | ||||||
7 | Education Realty Trust, Inc. | 35 | ||||||
39 | Entertainment Properties Trust | 1,319 | ||||||
16 | Felcor Lodging Trust, Inc. | 50 | ||||||
11 | First Industrial Realty Trust, Inc. | 49 | ||||||
5 | First Potomac Realty Trust | 59 | ||||||
1 | Franklin Street Properties Corp. | 10 | ||||||
3 | Getty Realty Corp. | 73 | ||||||
— | Gladstone Commercial Corp. | 5 | ||||||
1 | Hatteras Financial Corp. | 25 | ||||||
1 | Healthcare Realty Trust, Inc. | 21 | ||||||
5 | Hersha Hospitality Trust | 12 | ||||||
6 | Highwoods Properties, Inc. | 153 | ||||||
2 | Home Properties of New York, Inc. | 66 | ||||||
5 | Inland Real Estate Corp. | 40 | ||||||
26 | iStar Financial, Inc. | 54 | ||||||
1 | Kilroy Realty Corp. | 25 | ||||||
7 | Kite Realty Group Trust | 24 | ||||||
1 | LaSalle Hotel Properties | 19 | ||||||
18 | Lexington Realty Trust | 78 | ||||||
12 | Medical Properties Trust, Inc. | 96 | ||||||
21 | MFA Mortgage Investments, Inc. | 156 | ||||||
2 | Mid-America Apartment Communities, Inc. | 75 | ||||||
3 | National Health Investors, Inc. | 96 | ||||||
4 | National Retail Properties, Inc. | 86 | ||||||
2 | Omega Healthcare Investors | 27 | ||||||
6 | Penn Real Estate Investment Trust | 41 | ||||||
2 | PS Business Parks, Inc. | 75 | ||||||
6 | Ramco-Gershenson Properties Trust w/ Rights | 52 | ||||||
5 | Redwood Trust, Inc. | 63 | ||||||
2 | Resource Capital Corp. | 10 | ||||||
1 | Sun Communities, Inc. | 13 | ||||||
11 | Sunstone Hotel Investors, Inc. | 86 | ||||||
4 | U-Store-It | 24 | ||||||
1 | Walter Investment Management | 7 | ||||||
1 | Washington Real Estate Investment Trust | 29 | ||||||
3,945 | ||||||||
Retailing — 2.6% | ||||||||
4 | Asbury Automotive Group • | 37 | ||||||
1 | Books-A-Million, Inc. | 10 | ||||||
129 | Borders Group, Inc. • | 250 | ||||||
1 | Brown Shoe Co., Inc. | 5 | ||||||
3 | Build-A-Bear Workshop, Inc. • | 17 | ||||||
1 | Charming Shoppes, Inc. • | 3 | ||||||
6 | Collective Brands, Inc. • | 104 | ||||||
1 | Core-Mark Holding Co., Inc. • | 36 | ||||||
6 | Dillard’s, Inc. | 84 | ||||||
2 | Dress Barn, Inc. • | 32 | ||||||
— | DSW, Inc. • | 2 | ||||||
1 | Genesco, Inc. • | 29 | ||||||
13 | Group 1 Automotive, Inc. | 330 | ||||||
7 | Gymboree Corp. • | 294 | ||||||
5 | Jo-Ann Stores, Inc. • | 143 | ||||||
3 | Lithia Motors, Inc. | 22 | ||||||
4 | Men’s Wearhouse, Inc. | 82 | ||||||
12 | New York & Co., Inc. • | 52 | ||||||
37 | OfficeMax, Inc. | 428 | ||||||
4 | Orbitz Worldwide, Inc. • | 18 | ||||||
10 | Rent-A-Center, Inc. • | 180 | ||||||
3 | Retail Ventures, Inc. • | 22 | ||||||
1 | Sally Beauty Co., Inc. • | 9 | ||||||
2 | Sonic Automotive, Inc. | 18 | ||||||
6 | Stage Stores, Inc. | 66 | ||||||
3 | Tween Brands, Inc. • | 29 | ||||||
2,302 | ||||||||
Semiconductors & Semiconductor Equipment — 1.6% | ||||||||
1 | Cymer, Inc. • | 22 | ||||||
7 | DSP Group, Inc. • | 42 | ||||||
165 | Entegris, Inc. • | 621 | ||||||
3 | Pericom Semiconductor Corp. • | 25 | ||||||
21 | Photronics, Inc. • | 87 | ||||||
6 | RF Micro Devices, Inc. • | 25 | ||||||
19 | Silicon Storage Technology, Inc. • | 38 | ||||||
11 | TriQuint Semiconductor, Inc. • | 57 | ||||||
17 | Varian Semiconductor Equipment Associates, Inc. • | 469 | ||||||
1,386 | ||||||||
Software & Services — 7.2% | ||||||||
10 | Acxiom Corp. • | 118 | ||||||
14 | Cass Information Systems, Inc. | 422 | ||||||
23 | Computer Services, Inc. | 812 | ||||||
3 | CSG Systems International, Inc. • | 42 | ||||||
22 | DealerTrack Holdings, Inc. • | 363 | ||||||
3 | DivX, Inc. • | 12 | ||||||
21 | Earthlink, Inc. | 167 |
8
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - - 95.7% — (continued) | ||||||||
Software & Services — 7.2% — (continued) | ||||||||
5 | Fair Isaac, Inc. | $ | 95 | |||||
19 | Global Cash Access, Inc. • | 120 | ||||||
1 | Hackett Group, Inc. • | 4 | ||||||
3 | Internap Network Services Corp. • | 11 | ||||||
1 | Internet Brands, Inc. Class A • | 10 | ||||||
3 | JDA Software Group, Inc. • | 56 | ||||||
10 | Lawson Software, Inc. • | 62 | ||||||
5 | Ness Technologies, Inc. • | 31 | ||||||
3 | Perficient, Inc. • | 22 | ||||||
5 | Perot Systems Corp. Class A • | 145 | ||||||
1 | Pervasive Software, Inc. • | 5 | ||||||
7 | Quest Software, Inc. • | 124 | ||||||
18 | Solera Holdings, Inc. | 588 | ||||||
32 | Syntel, Inc. | 1,132 | ||||||
17 | Tibco Software, Inc. • | 151 | ||||||
18 | Unisys Corp. • | 520 | ||||||
10 | United Online, Inc. | 82 | ||||||
62 | VeriFone Holdings, Inc. • | 825 | ||||||
1 | Virtusa Corp. • | 8 | ||||||
9 | Web.com Group, Inc. • | 66 | ||||||
5,993 | ||||||||
Technology Hardware & Equipment — 5.2% | ||||||||
28 | 3Com Corp. • | 143 | ||||||
11 | ADC Telecommunications, Inc. • | 70 | ||||||
10 | Arris Group, Inc. • | 106 | ||||||
45 | Avid Technology, Inc. • | 562 | ||||||
5 | Avocent Corp. • | 126 | ||||||
11 | Benchmark Electronics, Inc. • | 178 | ||||||
1 | Black Box Corp. | 17 | ||||||
20 | Coherent, Inc. • | 503 | ||||||
9 | Cray, Inc. • | 68 | ||||||
2 | CTS Corp. | 19 | ||||||
1 | DDI Corp. • | 4 | ||||||
1 | Digi International, Inc. • | 10 | ||||||
54 | Electronics for Imaging, Inc. • | 629 | ||||||
3 | Harmonic, Inc. • | 17 | ||||||
13 | Harris Stratex Networks Class A • | 83 | ||||||
7 | Insight Enterprises, Inc. • | 76 | ||||||
43 | Jabil Circuit, Inc. | 575 | ||||||
7 | Methode Electronics, Inc. | 48 | ||||||
3 | Osi Systems, Inc. • | 55 | ||||||
1 | PC Connection, Inc. • | 6 | ||||||
2 | PC Mall, Inc. • | 13 | ||||||
5 | PC-Tel, Inc. • | 32 | ||||||
14 | Plantronics, Inc. | 346 | ||||||
11 | Plexus Corp. • | 286 | ||||||
1 | Scansource, Inc. • | 36 | ||||||
1 | SeaChange International, Inc. • | 6 | ||||||
6 | Smart Modular Technologies, Inc. • | 24 | ||||||
1 | Spectrum Control, Inc. • | 5 | ||||||
9 | Symmetricom, Inc. • | 41 | ||||||
3 | SYNNEX Corp. • | 82 | ||||||
11 | Technitrol, Inc. | 83 | ||||||
3 | Tekelec • | 50 | ||||||
9 | TTM Technologies, Inc. • | 90 | ||||||
4,389 | ||||||||
Telecommunication Services — 0.7% | ||||||||
21 | Cincinnati Bell, Inc. • | 65 | ||||||
2 | D & E Communications, Inc. | 21 | ||||||
54 | General Communication, Inc. Class A • | 332 | ||||||
3 | Global Crossing Ltd. • | 37 | ||||||
3 | iBasis, Inc. • | 6 | ||||||
1 | iPCS, Inc. • | 33 | ||||||
9 | Premiere Global Services, Inc. • | 65 | ||||||
1 | Syniverse Holdings, Inc. • | 23 | ||||||
6 | USA Mobility, Inc. | 68 | ||||||
650 | ||||||||
Transportation — 3.3% | ||||||||
2 | Air Transport Services Group, Inc. • | 6 | ||||||
2 | Alaska Air Group, Inc. • | 51 | ||||||
— | Amerco • | 4 | ||||||
5 | Atlas Air Worldwide Holdings, Inc. • | 123 | ||||||
3 | Avis Budget Group, Inc. • | 25 | ||||||
4 | Celadon Group, Inc. • | 39 | ||||||
2 | Dollar Thrifty Automotive Group, Inc. • | 44 | ||||||
22 | Forward Air Corp. | 464 | ||||||
5 | Heartland Express, Inc. | 62 | ||||||
3 | Knight Transportation, Inc. | 45 | ||||||
44 | Landstar System, Inc. | 1,537 | ||||||
3 | Pacer International, Inc. | 8 | ||||||
3 | Saia, Inc. • | 38 | ||||||
11 | SkyWest, Inc. | 160 | ||||||
3 | Ultrapetrol Bahamas Ltd. • | 16 | ||||||
— | USA Truck, Inc. • | 3 | ||||||
6 | Werner Enterprises, Inc. | 103 | ||||||
2,728 | ||||||||
Utilities — 2.8% | ||||||||
4 | Avista Corp. | 80 | ||||||
4 | Black Hills Corp. | 90 | ||||||
1 | California Water Service Group | 21 | ||||||
1 | CH Energy Group | 25 | ||||||
1 | Chesapeake Utilities Corp. | 27 | ||||||
24 | El Paso Electric Co. • | 453 | ||||||
1 | Empire District Electric Co. | 11 | ||||||
2 | IDACORP, Inc. | 50 | ||||||
1 | MGE Energy, Inc. | 42 | ||||||
5 | New Jersey Resources Corp. | 184 | ||||||
— | Nicor, Inc. | 12 | ||||||
7 | NorthWestern Corp. | 172 | ||||||
2 | Piedmont Natural Gas | 35 | ||||||
6 | PNM Resources, Inc. | 59 | ||||||
8 | Portland General Electric Co. | 148 | ||||||
5 | South Jersey Industries, Inc. | 167 | ||||||
6 | Southwest Gas Corp. | 151 | ||||||
4 | U.S. Geothermal, Inc. • | 7 | ||||||
7 | UniSource Energy Corp. | 191 | ||||||
23 | Westar Energy, Inc. | 441 | ||||||
1 | WGL Holdings, Inc. | 37 | ||||||
2,403 | ||||||||
Total Common stocks (Cost $84,568) | $ | 80,760 | ||||||
9
Schedule of Investments – (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
PREFERRED STOCKS - 0.5% | ||||||||||||
Banks — 0.5% | ||||||||||||
— | East West Bancorp, Inc., 8.00% ۞ ⌂ | $ | 398 | |||||||||
Total preferred stocks (cost $482) | $ | 398 | ||||||||||
Total long-term investments (cost $85,050) | $ | 81,158 | ||||||||||
SHORT-TERM INVESTMENTS - 3.7% | ||||||||||||
Investment Pools and Funds — 3.7% | ||||||||||||
555 | Federated Investors Prime Obligations Fund | $ | 555 | |||||||||
2,535 | State Street Bank Money Market Fund | 2,535 | ||||||||||
3,090 | ||||||||||||
Total short-term investments (cost $3,090) | $ | 3,090 | ||||||||||
Total investments (cost $88,140) ▲ | 99.9 | % | $ | 84,248 | ||||||||
Other assets and liabilities | 0.1 | % | 84 | |||||||||
Total net assets | 100.0 | % | $ | 84,332 | ||||||||
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 0.2% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $90,159 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 8,131 | ||
Unrealized Depreciation | (14,042 | ) | ||
Net Unrealized Depreciation | $ | (5,911 | ) | |
• | 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 | 9 | Long | Dec 2009 | $ | (45 | ) | ||||||
* | The number of contracts does not omit 000’s. |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
10
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 80,760 | $ | 80,760 | $ | — | $ | — | ||||||||
Preferred Stocks ‡ | 398 | 398 | — | — | ||||||||||||
Short-Term Investments | 3,090 | 3,090 | — | — | ||||||||||||
Total | $ | 84,248 | $ | 84,248 | $ | — | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 45 | $ | 45 | $ | — | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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. |
11
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $88,140) | $ | 84,248 | ||
Cash | 37 | * | ||
Receivables: | ||||
Fund shares sold | 25 | |||
Dividends and interest | 64 | |||
Other assets | 19 | |||
Total assets | 84,393 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 14 | |||
Investment management fees | 14 | |||
Distribution fees | 1 | |||
Variation margin | 13 | |||
Accrued expenses | 19 | |||
Total liabilities | 61 | |||
Net assets | $ | 84,332 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 118,125 | |||
Accumulated undistributed net investment income | 356 | |||
Accumulated net realized loss on investments | (30,212 | ) | ||
Unrealized depreciation of investments | (3,937 | ) | ||
Net assets | $ | 84,332 | ||
Shares authorized | 800,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.95/$8.41 | ||
Shares outstanding | 2,099 | |||
Net assets | $ | 16,695 | ||
Class B: Net asset value per share | $ | 7.86 | ||
Shares outstanding | 76 | |||
Net assets | $ | 596 | ||
Class C: Net asset value per share | $ | 7.88 | ||
Shares outstanding | 112 | |||
Net assets | $ | 880 | ||
Class Y: Net asset value per share | $ | 7.96 | ||
Shares outstanding | 8,310 | |||
Net assets | $ | 66,161 | ||
* | Cash of $36 was designated to cover open futures contracts. |
12
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 1,552 | ||
Interest | 15 | |||
Less: Foreign tax withheld | — | |||
Total investment income | 1,567 | |||
Expenses: | ||||
Investment management fees | 720 | |||
Transfer agent fees | 24 | |||
Distribution fees | ||||
Class A | 35 | |||
Class B | 5 | |||
Class C | 7 | |||
Custodian fees | 18 | |||
Accounting services fees | 9 | |||
Registration and filing fees | 33 | |||
Board of Directors’ fees | 4 | |||
Audit fees | 8 | |||
Other expenses | 30 | |||
Total expenses (before waivers and fees paid indirectly) | 893 | |||
Expense waivers | (4 | ) | ||
Transfer agent fee waivers | (3 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (7 | ) | ||
Total expenses, net | 886 | |||
Net Investment Income | 681 | |||
Net Realized Loss on Investments and Other Financial Instruments: | ||||
Net realized loss on investments in securities | (17,865 | ) | ||
Net realized gain on futures | 65 | |||
Net Realized Loss on Investments and Other Financial Instruments | (17,800 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments: | ||||
Net unrealized appreciation of investments | 23,222 | |||
Net unrealized appreciation of futures | 108 | |||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments | 23,330 | |||
Net Gain on Investments and Other Finanical Instruments | 5,530 | |||
Net Increase in Net Assets Resulting from Operations | $ | 6,211 | ||
13
(000’s Omitted)
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income . | $ | 681 | $ | 1,103 | ||||
Net realized loss on investments and other financial instruments | (17,800 | ) | (12,620 | ) | ||||
Net unrealized appreciation (depreciation) of investments and other financial instruments | 23,330 | (27,686 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 6,211 | (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 | 1,102 | 2,992 | ||||||
Class B | 77 | 134 | ||||||
Class C | 136 | 330 | ||||||
Class Y | (1,441 | ) | 11,680 | |||||
Net increase (decrease) from capital share transactions | (126 | ) | 15,136 | |||||
Net Increase (Decrease) In Net Assets | 5,045 | (32,344 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 79,287 | 111,631 | ||||||
End of period | $ | 84,332 | $ | 79,287 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 356 | $ | 805 | ||||
14
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
15
Notes to Financial Statements – (continued)
October 31, 2009
(000’s Omitted)
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | ||
Options contracts on securities, currencies, indices, futures contracts, commodities and other instruments shall be valued at their last reported sale 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 sale price at the Valuation Time on another exchange or market where it did trade. If it is not possible to determine the last reported sale price on the Primary Market or another 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. Absent both bid and asked prices on such exchange, the bid price may be used. | ||
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 and asked 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. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
16
• | Level 1 – Quoted prices in active markets for identical securities. Level 1 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may use 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 October 31, 2009. | ||
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. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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). |
17
Notes to Financial Statements – (continued)
October 31, 2009
(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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||
Equity contracts | Summary of Net Assets – Unrealized depreciation | $ | 45 |
The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the year ended October 31, 2009. | ||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Equity contracts | $ | — | $ | — | $ | 65 | $ | — | $ | — | $ | 65 | ||||||||||||
Total | $ | — | $ | — | $ | 65 | $ | — | $ | — | $ | 65 | ||||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Equity contracts | — | — | 108 | — | — | $ | 108 | |||||||||||||||||
Total | $ | — | $ | — | $ | 108 | $ | — | $ | — | $ | 108 | ||||||||||||
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. |
18
3. | Futures and Options: |
Futures and Options Transactions – The Fund is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset 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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of October 31, 2009. | |||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. As of October 31, 2009, there were no outstanding purchased or written option contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) – Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale |
19
Notes to Financial Statements – (continued)
October 31, 2009
(000’s Omitted)
adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | |||
c) | Distributions and Components of Distributable Earnings – 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 1,040 | $ | 7,663 | ||||
Long-Term Capital Gains * | — | 614 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 357 | ||
Accumulated Capital Losses * | (28,239 | ) | ||
Unrealized Depreciation † | (5,911 | ) | ||
Total Accumulated Deficit | $ | (33,793 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts – The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $90, increase accumulated net realized gain on investments by $91, and decrease paid-in-capital by $1. | ||
e) | Capital Loss Carryforward – At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 11,901 | ||
2017 | 16,338 | |||
Total | $ | 28,239 | ||
f) | Accounting for Uncertainty in Income Taxes – Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
20
5. | Expenses: |
a) | Investment Management Agreement – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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”), SSgA Funds Management, Inc. (“SSgAFM”) and Metropolitan West Capital Management, LLC (“MetWest Capital”) 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 year ended October 31, 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 services 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 year ended October 31, 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 year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||
October 31, | October 31, | October 31, | October 31, | |||||||||||
2009 | 2008 | 2007 | 2006 | |||||||||||
Class A Shares | 1.50 | % | 1.41 | % | 1.40 | % | 1.60%* | |||||||
Class B Shares | 2.07 | 2.24 | 2.35 | 2.35* | ||||||||||
Class C Shares | 2.12 | 2.26 | 2.32 | 2.35* | ||||||||||
Class Y Shares | 1.14 | 1.10 | 1.13 | 1.20* |
* | From July 31, 2006 (commencement of operations), through October 31, 2006. |
21
Notes to Financial Statements – (continued)
October 31, 2009
(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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $28 and contingent deferred sales charges of $1 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $21 for providing such services. These fees are accrued daily and paid monthly. |
6. | Affiliate Holdings: | |
As of October 31, 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 year ended October 31, 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 | $ | 41,152 | ||
Sales Proceeds Excluding U.S. Government Obligations | 41,371 |
22
8. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 463 | 23 | (331 | ) | — | 155 | 293 | 127 | (97 | ) | — | 323 | ||||||||||||||||||||||||||||
Amount | $ | 3,158 | $ | 149 | $ | (2,205 | ) | $ | — | $ | 1,102 | $ | 2,539 | $ | 1,316 | $ | (863 | ) | $ | — | $ | 2,992 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 21 | — | (10 | ) | — | 11 | 19 | 4 | (8 | ) | — | 15 | ||||||||||||||||||||||||||||
Amount | $ | 141 | $ | 1 | $ | (65 | ) | $ | — | $ | 77 | $ | 175 | $ | 36 | $ | (77 | ) | $ | — | $ | 134 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 50 | — | (32 | ) | — | 18 | 67 | 5 | (42 | ) | — | 30 | ||||||||||||||||||||||||||||
Amount | $ | 360 | $ | 1 | $ | (225 | ) | $ | — | $ | 136 | $ | 610 | $ | 49 | $ | (329 | ) | $ | — | $ | 330 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 338 | 136 | (734 | ) | — | (260 | ) | 1,452 | 663 | (1,273 | ) | — | 842 | |||||||||||||||||||||||||||
Amount | $ | 2,141 | $ | 888 | $ | (4,470 | ) | $ | — | $ | (1,441 | ) | $ | 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) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | — | $ | 2 | |||||
For the Year Ended October 31, 2008 | 1 | $ | 9 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. | ||
11. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
23
- Selected Per-Share Data (a) - | ||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.42 | $ | 0.05 | $ | — | $ | 0.56 | $ | 0.61 | $ | (0.08 | ) | $ | — | $ | — | $ | (0.08 | ) | $ | 0.53 | $ | 7.95 | ||||||||||||||||||||
B | 7.31 | 0.01 | — | 0.56 | 0.57 | (0.02 | ) | — | — | (0.02 | ) | 0.55 | 7.86 | |||||||||||||||||||||||||||||||
C | 7.32 | — | — | 0.57 | 0.57 | (0.01 | ) | — | — | (0.01 | ) | 0.56 | 7.88 | |||||||||||||||||||||||||||||||
Y | 7.43 | 0.07 | — | 0.56 | 0.63 | (0.10 | ) | — | — | (0.10 | ) | 0.53 | 7.96 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 11.65 | — | — | (3.59 | ) | (3.59 | ) | — | (0.75 | ) | — | (0.75 | ) | (4.34 | ) | 7.31 | ||||||||||||||||||||||||||||
C | 11.66 | — | — | (3.59 | ) | (3.59 | ) | — | (0.75 | ) | — | (0.75 | ) | (4.34 | ) | 7.32 | ||||||||||||||||||||||||||||
Y | 11.80 | 0.10 | — | (3.64 | ) | (3.54 | ) | (0.08 | ) | (0.75 | ) | — | (0.83 | ) | (4.37 | ) | 7.43 | |||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.96 | 0.07 | — | 0.78 | 0.85 | — | (0.02 | ) | — | (0.02 | ) | 0.83 | 11.79 | |||||||||||||||||||||||||||||||
B | 10.93 | (0 .02 | ) | — | 0.76 | 0.74 | — | (0.02 | ) | — | (0.02 | ) | 0.72 | 11.65 | ||||||||||||||||||||||||||||||
C | 10.93 | (0 .02 | ) | — | 0.77 | 0.75 | — | (0.02 | ) | — | (0.02 | ) | 0.73 | 11.66 | ||||||||||||||||||||||||||||||
Y | 10.97 | 0.10 | — | 0.78 | 0.88 | (0.03 | ) | (0.02 | ) | — | (0.05 | ) | 0.83 | 11.80 | ||||||||||||||||||||||||||||||
From (commencement of operations) July 31, 2006, through October 31, 2006 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A(f) | 10.00 | 0.02 | — | 0.94 | 0.96 | — | — | — | — | 0.96 | 10.96 | |||||||||||||||||||||||||||||||||
B(f) | 10.00 | — | — | 0.93 | 0.93 | — | — | — | — | 0.93 | 10.93 | |||||||||||||||||||||||||||||||||
C(f) | 10.00 | — | — | 0.93 | 0.93 | — | — | — | — | 0.93 | 10.93 | |||||||||||||||||||||||||||||||||
Y(f) | 10.00 | 0.01 | — | 0.96 | 0.97 | — | — | — | — | 0.97 | 10.97 |
(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) | Commenced operations on July 31, 2006. | |
(g) | Not annualized. | |
(h) | Annualized. |
24
- Ratios and Supplemental Data - | ||||||||||||||||||||||||||||
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net | |||||||||||||||||||||||||
Net Assets at End | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | of Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Rate(d) | ||||||||||||||||||||||
8.43 | % | $ | 16,695 | 1.50 | % | 1.50 | % | 1.50 | % | 0.66 | % | 59 | % | |||||||||||||||
7.89 | 596 | 2.72 | 2.07 | 2.07 | 0.08 | – | ||||||||||||||||||||||
7.81 | 880 | 2.67 | 2.12 | 2.12 | 0.04 | – | ||||||||||||||||||||||
8.85 | 66,161 | 1.14 | 1.14 | 1.14 | 1.03 | – | ||||||||||||||||||||||
(32.15 | ) | 14,428 | 1.41 | 1.41 | 1.41 | 0.81 | 51 | |||||||||||||||||||||
(32.69 | ) | 476 | 2.51 | 2.24 | 2.24 | (0.02 | ) | – | ||||||||||||||||||||
(32.66 | ) | 685 | 2.48 | 2.26 | 2.26 | (0.04 | ) | – | ||||||||||||||||||||
(31.93 | ) | 63,698 | 1.10 | 1.10 | 1.10 | 1.11 | – | |||||||||||||||||||||
7.78 | 19,106 | 1.40 | 1.40 | 1.40 | 0.67 | 58 | ||||||||||||||||||||||
6.79 | 587 | 2.38 | 2.35 | 2.35 | (0.25 | ) | – | |||||||||||||||||||||
6.88 | 749 | 2.33 | 2.33 | 2.33 | (0.27 | ) | – | |||||||||||||||||||||
8.09 | 91,189 | 1.13 | 1.13 | 1.13 | 0.97 | – | ||||||||||||||||||||||
9.60 | (g) | 15,872 | 1 .73 | (h) | 1 .60 | (h) | 1 .60 | (h) | 0 .78 | (h) | 10 | |||||||||||||||||
9.30 | (g) | 308 | 2 .53 | (h) | 2 .35 | (h) | 2 .35 | (h) | 0 .03 | (h) | – | |||||||||||||||||
9.30 | (g) | 280 | 2 .51 | (h) | 2 .35 | (h) | 2 .35 | (h) | 0 .03 | (h) | – | |||||||||||||||||
9.70 | (g) | 1,538 | 1 .71 | (h) | 1 .20 | (h) | 1 .20 | (h) | 0 .79 | (h) | – |
25
The Hartford Mutual Funds, Inc.
December 15, 2009
26
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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). |
27
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
28
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 from 2005 – 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 – 2009. |
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
29
DRD* | 100.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.078 | N/A | N/A | 0.078 | ||||||||||||
Class B | 0.022 | N/A | N/A | 0.022 | ||||||||||||
Class C | 0.010 | N/A | N/A | 0.010 | ||||||||||||
Class Y | 0.104 | N/A | N/A | 0.104 |
30
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,199.10 | $ | 8.26 | $ | 1,000.00 | $ | 1,017.69 | $ | 7.58 | 1.49 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,194.50 | $ | 11.78 | $ | 1,000.00 | $ | 1,014.47 | $ | 10.82 | 2.13 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,193.90 | $ | 12.00 | $ | 1,000.00 | $ | 1,014.27 | $ | 11.02 | 2.17 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,200.60 | $ | 6.27 | $ | 1,000.00 | $ | 1,019.51 | $ | 5.75 | 1.13 | 184 | 365 |
31
32
33
Approval of Investment Management and Investment Sub-Advisory Agreements – (continued)
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
12 | ||||
13 | ||||
14 | ||||
15 | ||||
16 | ||||
24 | ||||
26 | ||||
27 | ||||
29 | ||||
29 | ||||
30 | ||||
31 | ||||
32 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks to provide a high level of income. | |
Growth of a $10,000 investment in Class A which includes Sales Charge
Performance information may reflect historical or current expense waivers/reimbursements from the investment adviser, without which performance would have been lower. For information on current expense waivers/reimbursements, please see the prospectus.
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
Short Duration A# | 8.23 | % | 2.81 | % | 2.98 | % | ||||||
Short Duration A## | 4.98 | % | 2.18 | % | 2.54 | % | ||||||
Short Duration B# | 7.42 | % | 2.04 | % | 2.23 | % | ||||||
Short Duration B## | 2.42 | % | 1.68 | % | 2.23 | % | ||||||
Short Duration C# | 7.42 | % | 2.04 | % | 2.23 | % | ||||||
Short Duration C## | 6.42 | % | 2.04 | % | 2.23 | % | ||||||
Short Duration Y# | 8.62 | % | 3.09 | % | 3.05 | % | ||||||
Barclays Capital 1-3 Year U.S. | 6.31 | % | 4.25 | % | 3.81 | % | ||||||
Government/Credit Index | ||||||||||||
Barclays Capital 1-5 Year U.S. | 8.47 | % | 4.44 | % | 4.17 | % | ||||||
Government/Credit Index |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. | |
(5) | Class Y shares commenced operations on 11/28/03. |
Portfolio Managers | ||
Robert Crusha, CFA | Brian Dirgins, CFA | |
Vice President | Senior Vice President |
2
as of October 31, 2009
Percentage of | ||||
Long Term | ||||
Rating | Holdings | |||
AAA | 22.3 | % | ||
AA | 20.1 | |||
A | 29.5 | |||
BBB | 27.6 | |||
BB | 0.1 | |||
CCC | 0.1 | |||
Not Rated | 0.3 | |||
Total | 100.0 | % | ||
3
Percentage of | ||||
Industry | Net Assets | |||
Advertising and Related Services | 0.9 | % | ||
Aerospace Product and Parts Manufacturing | 1.8 | |||
Agriculture, Construction, and Mining Machinery | 0.2 | |||
Alumina and Aluminum Production and Processing | 0.3 | |||
Basic Chemical Manufacturing | 0.4 | |||
Beverage Manufacturing | 2.2 | |||
Cable and Other Program Distribution | 0.7 | |||
Captive Auto Finance | 7.9 | |||
Commercial and Service Industry Machinery | 0.4 | |||
Commercial Banking | 9.7 | |||
Communications Equipment Manufacturing | 0.4 | |||
Computer and Peripheral Equipment Manufacturing | 1.0 | |||
Couriers | 0.4 | |||
Credit Card Issuing | 2.9 | |||
Depository Credit Banking | 3.2 | |||
Electric Generation, Transmission and Distribution | 2.5 | |||
Grain and Oilseed Milling | 0.4 | |||
Grocery Stores | 1.2 | |||
Health and Personal Care Stores | 1.4 | |||
Industrial Machinery, Equipment Rental & Leasing | 0.6 | |||
Insurance Carriers | 5.1 | |||
International Trade Financing (Foreign Banks) | 0.5 | |||
Iron and Steel Mills and Ferroalloy Manufacturing | 0.4 | |||
Medical and Diagnostic Laboratories | 0.4 | |||
Medical Equipment and Supplies Manufacturing | 0.2 | |||
Metal Ore Mining | 1.5 | |||
Monetary Authorities — Central Bank | 0.1 | |||
Motor Vehicle Manufacturing | 0.4 | |||
Navigational, Measuring, and Control Instruments | 0.9 | |||
Nondepository Credit Banking | 3.0 | |||
Nonmetallic Mineral Mining and Quarrying | 0.2 | |||
Office Supplies, Stationery, and Gift Stores | 0.4 | |||
Oil and Gas Extraction | 2.9 | |||
Oilseed and Grain Farming | 0.1 | |||
Other Financial Investment Activities | 1.4 | |||
Other Food Manufacturing | 0.5 | |||
Other General Merchandise Stores | 0.3 | |||
Other Miscellaneous Manufacturing | 0.7 | |||
Petroleum and Coal Products Manufacturing | 1.6 | |||
Pharmaceutical & Medicine Manufacturing | 0.4 | |||
Pharmaceutical and Medicine Manufacturing | 1.7 | |||
Pipeline Transportation of Natural Gas | 0.9 | |||
Rail Transportation | 1.0 | |||
Real Estate Credit (Mortgage Banking) | 12.1 | |||
Residential Building Construction | 0.4 | |||
Resin, Synthetic Rubber, Filaments Manufacturing | 0.2 | |||
Securities and Commodity Contracts and Brokerage | 5.0 | |||
Soap, Cleaning Compound and Toilet Manufacturing | 0.4 | |||
Software Publishers | 0.9 | |||
Sovereign Foreign Governments | 0.7 | |||
Support Activities For Mining | 0.4 | |||
Telecommunications — Other | 1.4 | |||
Telecommunications — Wired Carriers | 1.1 | |||
Telecommunications — Wireless Carriers | 1.1 | |||
Telecommunications Resellers | 0.6 | |||
Tobacco Manufacturing | 0.2 | |||
Waste Treatment and Disposal | 0.6 | |||
Wireless Communications Services | 2.6 | |||
U.S. Government Agencies | 1.6 | |||
U.S. Government Securities | 0.7 | |||
Short-Term Investments | 5.1 | |||
Other Assets and Liabilities | 1.8 | |||
Total | 100.0 | % | ||
4
Shares or Principal Amount | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES — 22.4% | ||||||||
Captive Auto Finance — 7.9% | ||||||||
AmeriCredit Automobile Receivables Trust | ||||||||
$ | 452 | 4.47%, 01/12/2012 | $ | 456 | ||||
476 | 5.04%, 05/06/2011 | 472 | ||||||
363 | 5.42%, 08/08/2011 | 370 | ||||||
Capital Automotive Receivables Asset Trust | ||||||||
800 | 5.55%, 01/18/2011 | 809 | ||||||
1,000 | 6.35%, 03/17/2014 ■ | 946 | ||||||
Capital One Prime Automotive Receivables Trust | ||||||||
1,000 | 5.68%, 06/15/2014 | 981 | ||||||
Carmax Automotive Owner Trust | ||||||||
1,000 | 6.12%, 07/15/2013 | 1,016 | ||||||
DaimlerChrysler Automotive Trust | ||||||||
800 | 4.48%, 08/08/2014 | 826 | ||||||
800 | 5.14%, 09/08/2012 | 808 | ||||||
Ford Credit Automotive Owner Trust | ||||||||
1,200 | 2.98%, 08/15/2014 | 1,209 | ||||||
219 | 5.07%, 12/15/2010 | 221 | ||||||
2,924 | 5.29%, 04/15/2011 | 2,990 | ||||||
750 | 5.48%, 09/15/2011 | 773 | ||||||
500 | 5.68%, 06/15/2012 | 521 | ||||||
1,000 | 5.69%, 11/15/2012 | 1,065 | ||||||
Marlin Leasing Receivables LLC | ||||||||
78 | 5.09%, 08/15/2012 ■ | 78 | ||||||
827 | 5.33%, 09/16/2013 ■ | 826 | ||||||
235 | 5.63%, 09/16/2013 ■ | 222 | ||||||
Swift Master Automotive Receivables Trust | ||||||||
1,000 | 1.74%, 10/15/2012 Δ | 960 | ||||||
USAA Automotive Owner Trust | ||||||||
1,235 | 4.16%, 04/16/2012 | 1,258 | ||||||
860 | 5.07%, 06/15/2013 | 903 | ||||||
1,000 | 5.66%, 03/15/2013 | 990 | ||||||
Wachovia Automotive Loan Owner Trust | ||||||||
1,700 | 5.42%, 04/21/2014 ■ | 1,572 | ||||||
1,000 | 5.54%, 12/20/2012 ■ | 974 | ||||||
WFS Financial Owner Trust | ||||||||
1,091 | 4.76%, 05/17/2013 | 1,101 | ||||||
22,347 | ||||||||
Credit Card Issuing — 2.9% | ||||||||
American Express Credit Account Master Trust | ||||||||
2,000 | 0.68%, 01/15/2013 ■ Δ | 1,981 | ||||||
Capital One Multi-Asset Execution Trust | ||||||||
1,000 | 1.59%, 03/15/2013 Δ | 1,003 | ||||||
Chase Issuance Trust | ||||||||
1,500 | 1.09%, 06/15/2012 Δ | 1,506 | ||||||
Citibank Credit Card Issuance Trust | ||||||||
2,000 | 0.52%, 01/09/2012 Δ | 1,992 | ||||||
1,000 | 5.70%, 05/15/2013 | 1,026 | ||||||
MBNA Credit Card Master Note Trust | ||||||||
550 | 6.80%, 07/15/2014 | 572 | ||||||
8,080 | ||||||||
Other Financial Investment Activities — 0.1% | ||||||||
North Street Referenced Linked Notes | ||||||||
1,000 | 1.19%, 04/28/2011 ⌂ Δ | 120 | ||||||
500 | 1.54%, 04/28/2011 ⌂ † Δ | 54 | ||||||
174 | ||||||||
Real Estate Credit (Mortgage Banking) — 11.5% | ||||||||
Bayview Commercial Asset Trust | ||||||||
344 | 1.28%, 01/25/2035 ■ Δ | 153 | ||||||
5,841 | 7.00%, 07/25/2037 ⌂ ► | 454 | ||||||
10,592 | 7.18%, 01/25/2037 ⌂ ►† | 741 | ||||||
9,837 | 7.50%, 09/25/2037 ⌂ ► | 789 | ||||||
Bayview Financial Acquisition Trust | ||||||||
901 | 4.91%, 02/25/2033 ⌂ | 828 | ||||||
2,000 | 5.64%, 11/28/2036 | 1,331 | ||||||
Bear Stearns Asset Backed Securities, Inc. | ||||||||
565 | 5.16%, 09/25/2033 Δ | 296 | ||||||
Bear Stearns Commercial Mortgage Securities, Inc. | ||||||||
18,959 | 4.12%, 11/11/2041 ⌂ ► | 293 | ||||||
48,676 | 4.65%, 02/11/2041 ⌂ ► | 308 | ||||||
104,991 | 6.25%, 12/11/2040 ⌂ ► | 367 | ||||||
CBA Commercial Small Balance Commercial Mortgage | ||||||||
9,563 | 3.00%, 01/25/2039 ⌂ ► | 383 | ||||||
16,655 | 4.79%, 12/25/2036 ⌂ † Δ | 656 | ||||||
17,389 | 7.00%, 07/25/2035 — 06/25/2038 ⌂ ► † | 1,126 | ||||||
Chase Commercial Mortgage Securities Corp. | ||||||||
1,997 | 7.63%, 07/15/2032 Δ | 2,046 | ||||||
Citicorp Residential Mortgage Securities | ||||||||
100 | 6.27%, 06/25/2037 Δ | 91 | ||||||
Citigroup Commercial Mortgage Trust | ||||||||
420 | 5.38%, 10/15/2049 | 430 | ||||||
Commercial Mortgage Pass-Through Certificates | ||||||||
1,500 | 0.74%, 12/15/2020 ⌂ Δ | 302 | ||||||
2,256 | 3.59%, 03/10/2039 ⌂ ► | 23 | ||||||
Countrywide Asset-Backed Certificates | ||||||||
894 | 5.71%, 11/25/2035 | 233 | ||||||
CS First Boston Mortgage Securities Corp. | ||||||||
9,004 | 4.17%, 07/15/2036 ⌂ ► | 99 | ||||||
1,000 | 5.42%, 05/15/2036 Δ | 1,005 | ||||||
1,500 | 6.52%, 08/13/2018 ■ | 1,462 | ||||||
Equity One ABS, Inc. | ||||||||
20 | 2.78%, 07/25/2034 Δ | 1 | ||||||
GE Capital Commercial Mortgage Corp. | ||||||||
6,292 | 3.76%, 03/10/2040 ■ ► | 51 | ||||||
GMAC Mortgage Corp. Loan Trust | ||||||||
801 | 4.59%, 04/25/2033 | 585 | ||||||
164 | 5.12%, 04/25/2033 | 57 | ||||||
465 | 5.75%, 10/25/2036 | 342 | ||||||
Goldman Sachs Mortgage Securities Corp. II | ||||||||
1,723 | 4.32%, 10/10/2028 | 1,748 | ||||||
14,266 | 4.38%, 08/10/2038 ⌂ ► | 70 | ||||||
1,000 | 5.48%, 11/10/2039 | 1,007 | ||||||
Green Tree Financial Corp. | ||||||||
1 | 7.30%, 01/15/2026 | 1 | ||||||
Greenwich Capital Commercial Funding Corp. | ||||||||
1,500 | 5.38%, 03/10/2039 | 1,523 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES — 22.4% — (continued) | ||||||||
Real Estate Credit (Mortgage Banking) — 11.5% — (continued) | ||||||||
Hasco NIM Trust | ||||||||
$ | 37 | 0.00%, 12/26/2035 ⌂ • | $ | — | ||||
JP Morgan Chase Commercial Mortgage Securities Corp. | ||||||||
1,181 | 1.04%, 02/15/2020 ⌂ Δ | 610 | ||||||
1,998 | 3.84%, 01/12/2039 | 1,999 | ||||||
10,309 | 4.65%, 10/15/2037 ■ ► | 61 | ||||||
28,170 | 4.82%, 08/12/2037 ► | 60 | ||||||
771 | 5.34%, 05/12/2045 | 789 | ||||||
JP Morgan Chase Commercial Mortgage Security Corp. | ||||||||
1,000 | 4.30%, 01/15/2038 | 998 | ||||||
LaSalle Commercial Mortgage Securities | ||||||||
15,248 | 6.20%, 09/20/2043 ⌂ ► | 149 | ||||||
LB-UBS Commercial Mortgage Trust | ||||||||
1,419 | 1.45%, 12/15/2036 ■ Δ | 7 | ||||||
Lehman Brothers Small Balance Commercial | ||||||||
1,014 | 6.77%, 09/27/2036 ⌂ † | 153 | ||||||
Long Beach Asset Holdings Corp. | ||||||||
180 | 0.00%, 04/25/2046 ■ • | — | ||||||
Merrill Lynch Mortgage Trust | ||||||||
11,617 | 3.81%, 08/12/2039 ⌂ ► | 168 | ||||||
13,559 | 3.96%, 10/12/2041 ⌂ ► | 223 | ||||||
18,034 | 4.67%, 09/12/2042 ⌂ ► | 134 | ||||||
1,057 | 5.53%, 05/12/2039 Δ | 1,076 | ||||||
Morgan Stanley Dean Witter Capital I | ||||||||
34 | 5.38%, 01/15/2039 | 35 | ||||||
Nationstar Home Equity Loan Trust | ||||||||
13 | 0.00%, 03/25/2037 ⌂ • | — | ||||||
Renaissance Home Equity Loan Trust | ||||||||
108 | 0.00%, 04/25/2037 ⌂ • | 1 | ||||||
675 | 7.00%, 09/25/2037 | 78 | ||||||
368 | 7.50%, 04/25/2037 | 2 | ||||||
Sovereign Commercial Mortgage Securities | ||||||||
2,000 | 5.79%, 07/22/2030 ■ Δ | 1,978 | ||||||
Structured Asset Investment Loan Trust | ||||||||
232 | 2.91%, 11/25/2033 Δ | 72 | ||||||
Structured Asset Securities Corp. | ||||||||
450 | 2.78%, 02/25/2037 Δ | 1 | ||||||
400 | 2.78%, 01/25/2037 ■ Δ | 4 | ||||||
Voyager Countrywide Delaware Trust | ||||||||
1,341 | 5.57%, 11/26/2035 ■ | 317 | ||||||
Wachovia Bank Commercial Mortgage Trust | ||||||||
1,220 | 5.42%, 01/15/2045 | 1,244 | ||||||
1,610 | 5.92%, 06/15/2049 Δ | 1,610 | ||||||
Washington Mutual, Inc. | ||||||||
16,945 | 7.00%, 11/23/2043 ⌂ ■ Ψ | 598 | ||||||
Wells Fargo Home Equity Trust | ||||||||
1,696 | 0.59%, 04/25/2034 Δ | 1,316 | ||||||
32,484 | ||||||||
Total asset & commercial mortgage backed securities (cost $71,362) | $ | 63,085 | ||||||
CORPORATE BONDS: INVESTMENT GRADE — 68.4% | ||||||||
Advertising and Related Services — 0.9% | ||||||||
Time Warner, Inc. | ||||||||
1,520 | 1.15%, 11/13/2009 Δ | 1,520 | ||||||
1,000 | 5.50%, 11/15/2011 | 1,069 | ||||||
2,589 | ||||||||
Aerospace Product and Parts Manufacturing — 1.8% | ||||||||
Boeing Co. | ||||||||
600 | 3.50%, 02/15/2015 | 614 | ||||||
Honeywell International, Inc. | ||||||||
1,092 | 4.25%, 03/01/2013 | 1,156 | ||||||
Northrop Grumman Corp. | ||||||||
2,000 | 7.13%, 02/15/2011 | 2,138 | ||||||
United Technologies Corp. | ||||||||
987 | 6.10%, 05/15/2012 | 1,089 | ||||||
4,997 | ||||||||
Agriculture, Construction, and Mining Machinery — 0.2% | ||||||||
Deere & Co. | ||||||||
534 | 7.85%, 05/15/2010 | 554 | ||||||
Alumina and Aluminum Production and Processing — 0.3% | ||||||||
Alcan, Inc. | ||||||||
750 | 6.45%, 03/15/2011 | 790 | ||||||
Basic Chemical Manufacturing — 0.4% | ||||||||
Dow Chemical Co. | ||||||||
1,000 | 7.60%, 05/15/2014 | 1,111 | ||||||
Beverage Manufacturing — 2.2% | ||||||||
Anheuser-Busch InBev N.V. | ||||||||
1,556 | 3.00%, 10/15/2012 ■ | 1,570 | ||||||
1,000 | 5.38%, 11/15/2014 ■ | 1,063 | ||||||
Coca-Cola Co. | ||||||||
1,000 | 3.63%, 03/15/2014 | 1,042 | ||||||
Diageo Capital plc | ||||||||
1,460 | 7.25%, 11/01/2009 | 1,460 | ||||||
PepsiCo, Inc. | ||||||||
1,000 | 3.75%, 03/01/2014 | 1,042 | ||||||
6,177 | ||||||||
Cable and Other Program Distribution — 0.7% | ||||||||
Time Warner Cable, Inc. | ||||||||
2,000 | 5.40%, 07/02/2012 | 2,136 | ||||||
Commercial and Service Industry Machinery Manufacturing — 0.4% | ||||||||
Xerox Corp. | ||||||||
1,000 | 7.13%, 06/15/2010 | 1,030 | ||||||
Commercial Banking — 9.7% | ||||||||
Barclays Bank plc | ||||||||
1,500 | 5.45%, 09/12/2012 | 1,623 | ||||||
Commonwealth Bank of Australia | ||||||||
2,000 | 2.75%, 10/15/2012 ■ | 2,012 | ||||||
Credit Suisse New York | ||||||||
1,800 | 3.45%, 07/02/2012 | 1,859 | ||||||
FleetBoston Financial Corp. | ||||||||
1,500 | 7.38%, 12/01/2009 | 1,507 |
6
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 68.4% — (continued) | ||||||||
Commercial Banking — 9.7% — (continued) | ||||||||
HSBC Bank USA | ||||||||
$ | 1,000 | 4.63%, 04/01/2014 | $ | 1,045 | ||||
Key Bank NA | ||||||||
250 | 1.17%, 11/03/2009 Δ | 250 | ||||||
1,500 | 5.70%, 08/15/2012 | 1,539 | ||||||
Manufacturers & Traders Trust Co. | ||||||||
795 | 5.59%, 12/28/2020 | 656 | ||||||
Marshall & Ilsley Corp. | ||||||||
1,500 | 0.47%, 06/01/2011 Δ | 1,337 | ||||||
National City Bank of Ohio | ||||||||
1,000 | 0.61%, 01/21/2010 Δ | 1,000 | ||||||
500 | 4.50%, 03/15/2010 | 505 | ||||||
Rabobank Netherlands | ||||||||
2,000 | 2.65%, 08/17/2012 ■ | 2,024 | ||||||
Santander US Debt S.A. | ||||||||
2,000 | 0.68%, 10/21/2011 ■ Δ | 1,996 | ||||||
Sovereign Bancorp, Inc. | ||||||||
2,000 | 0.84%, 03/23/2010 Δ | 1,998 | ||||||
State Street Bank & Trust Co. | ||||||||
800 | 0.51%, 12/08/2015 Δ | 742 | ||||||
500 | 1.85%, 03/15/2011 | 507 | ||||||
SunTrust Banks, Inc. | ||||||||
500 | 0.53%, 05/21/2012 Δ | 473 | ||||||
1,300 | 0.70%, 08/24/2015 Δ | 1,048 | ||||||
500 | 7.75%, 05/01/2010 | 514 | ||||||
Svenska Handelsbanken AB | ||||||||
1,000 | 1.45%, 09/14/2012 ■ Δ | 994 | ||||||
1,000 | 4.88%, 06/10/2014 ■ | 1,050 | ||||||
US Bank NA | ||||||||
500 | 6.38%, 08/01/2011 | 540 | ||||||
Westpac Banking Corp. | ||||||||
2,000 | 0.58%, 10/21/2011 ■ Δ | 1,998 | ||||||
27,217 | ||||||||
Communications Equipment Manufacturing — 0.4% | ||||||||
Cisco Systems, Inc. | ||||||||
1,000 | 5.25%, 02/22/2011 | 1,054 | ||||||
Computer and Peripheral Equipment Manufacturing — 1.0% | ||||||||
Dell, Inc. | ||||||||
500 | 3.38%, 06/15/2012 | 518 | ||||||
Hewlett-Packard Co. | ||||||||
500 | 1.43%, 05/27/2011 Δ | 508 | ||||||
300 | 2.25%, 05/27/2011 | 306 | ||||||
385 | 2.95%, 08/15/2012 | 395 | ||||||
IBM Corp. | ||||||||
1,000 | 4.95%, 03/22/2011 | 1,053 | ||||||
2,780 | ||||||||
Couriers — 0.4% | ||||||||
United Parcel Service, Inc. | ||||||||
1,000 | 3.88%, 04/01/2014 | 1,049 | ||||||
Depository Credit Banking — 3.2% | ||||||||
BB&T Corp. | ||||||||
500 | 3.10%, 07/28/2011 | 510 | ||||||
750 | 3.85%, 07/27/2012 | 775 | ||||||
500 | 5.70%, 04/30/2014 | 541 | ||||||
Citigroup, Inc. | ||||||||
1,000 | 5.25%, 02/27/2012 | 1,041 | ||||||
837 | 6.38%, 08/12/2014 | 888 | ||||||
Fifth Third Bank | ||||||||
1,000 | 4.75%, 02/01/2015 | 946 | ||||||
Wells Fargo & Co. | ||||||||
500 | 2.13%, 06/15/2012 | 509 | ||||||
2,673 | 7.55%, 06/21/2010 | 2,783 | ||||||
Wells Fargo Bank NA | ||||||||
1,000 | 1.06%, 05/16/2016 Δ | 865 | ||||||
8,858 | ||||||||
Electric Generation, Transmission and Distribution — 2.5% | ||||||||
Ohio Power Co. | ||||||||
1,500 | 0.76%, 04/05/2010 Δ | 1,499 | ||||||
Pacific Gas & Electric Co. | ||||||||
1,500 | 1.60%, 06/10/2010 Δ | 1,507 | ||||||
Southern Co. | ||||||||
2,917 | 0.68%, 10/21/2011 Δ | 2,926 | ||||||
Virginia Electric & Power Co. | ||||||||
1,000 | 4.50%, 12/15/2010 | 1,032 | ||||||
6,964 | ||||||||
Grain and Oilseed Milling — 0.4% | ||||||||
General Mills, Inc. | ||||||||
1,000 | 5.65%, 09/10/2012 | 1,092 | ||||||
Grocery Stores — 1.2% | ||||||||
Kroger Co. | ||||||||
1,035 | 6.75%, 04/15/2012 | 1,134 | ||||||
750 | 8.05%, 02/01/2010 | 763 | ||||||
Safeway, Inc. | ||||||||
700 | 4.95%, 08/16/2010 | 722 | ||||||
625 | 6.50%, 03/01/2011 | 662 | ||||||
3,281 | ||||||||
Health and Personal Care Stores — 1.4% | ||||||||
CVS Caremark Corp. | ||||||||
685 | 0.66%, 06/01/2010 Δ | 685 | ||||||
CVS Corp. | ||||||||
2,000 | 5.75%, 08/15/2011 | 2,151 | ||||||
Express Scripts, Inc. | ||||||||
1,200 | 5.25%, 06/15/2012 | 1,278 | ||||||
4,114 | ||||||||
Industrial Machinery, Equipment Rental & Leasing — 0.6% | ||||||||
COX Communications, Inc. | ||||||||
1,500 | 7.13%, 10/01/2012 | 1,683 | ||||||
Insurance Carriers — 5.1% | ||||||||
Aetna, Inc. | ||||||||
1,500 | 7.88%, 03/01/2011 | 1,590 | ||||||
Berkshire Hathaway Finance Corp. | ||||||||
1,500 | 4.00%, 04/15/2012 | 1,579 | ||||||
John Hancock Global Funding II | ||||||||
1,000 | 5.00%, 09/30/2013 ■ | 1,029 | ||||||
Massachusetts Mutual Global Funding | ||||||||
1,000 | 3.63%, 07/16/2012 ■ | 1,031 | ||||||
Met Life Global Funding I | ||||||||
1,000 | 5.13%, 04/10/2013 ■ | 1,059 | ||||||
Metropolitan Life Global Funding I | ||||||||
600 | 2.88%, 09/17/2012 ■ | 602 | ||||||
500 | 5.13%, 06/10/2014 ■ | 531 | ||||||
New York Life Global Funding | ||||||||
2,667 | 2.25%, 12/14/2012 ■ | 2,665 |
7
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 68.4% — (continued) | ||||||||
Insurance Carriers — 5.1% — (continued) | ||||||||
Prudential Financial, Inc. | ||||||||
$ | 2,000 | 5.10%, 12/14/2011 | $ | 2,104 | ||||
UnitedHealth Group, Inc. | ||||||||
1,000 | 0.79%, 06/21/2010 Δ | 996 | ||||||
Wellpoint, Inc. | ||||||||
500 | 4.25%, 12/15/2009 | 502 | ||||||
525 | 5.00%, 01/15/2011 | 544 | ||||||
14,232 | ||||||||
International Trade Financing (Foreign Banks) — 0.5% | ||||||||
Westpac Banking Corp. | ||||||||
1,500 | 4.20%, 02/27/2015 | 1,529 | ||||||
Iron and Steel Mills and Ferroalloy Manufacturing — 0.4% | ||||||||
ArcelorMittal | ||||||||
1,000 | 9.00%, 02/15/2015 | 1,155 | ||||||
Medical and Diagnostic Laboratories — 0.4% | ||||||||
Roche Holdings, Inc. | ||||||||
1,000 | 4.50%, 03/01/2012 ■ | 1,058 | ||||||
Medical Equipment and Supplies Manufacturing — 0.2% | ||||||||
CareFusion Corp. | ||||||||
500 | 4.13%, 08/01/2012 ■ | 514 | ||||||
Metal Ore Mining — 1.5% | ||||||||
Rio Tinto Finance USA Ltd. | ||||||||
1,500 | 5.88%, 07/15/2013 | 1,617 | ||||||
Xstrata Finance Dubai Ltd. | ||||||||
2,500 | 1.27%, 11/13/2009 ■Δ | 2,497 | ||||||
4,114 | ||||||||
Monetary Authorities — Central Bank — 0.1% | ||||||||
Bank of New York Mellon Corp. | ||||||||
363 | 4.30%, 05/15/2014 | 383 | ||||||
Motor Vehicle Manufacturing — 0.4% | ||||||||
Daimler Finance NA LLC | ||||||||
500 | 5.75%, 09/08/2011 | 528 | ||||||
DaimlerChrysler NA Holdings Corp. | ||||||||
600 | 5.88%, 03/15/2011 | 626 | ||||||
1,154 | ||||||||
Navigational, Measuring, and Control Instruments — 0.9% | ||||||||
Lockheed Martin Corp. | ||||||||
1,500 | 8.20%, 12/01/2009 | 1,508 | ||||||
Raytheon Co. | ||||||||
1,000 | 4.85%, 01/15/2011 | 1,038 | ||||||
2,546 | ||||||||
Nondepository Credit Banking — 3.0% | ||||||||
American Express Credit Corp. | ||||||||
1,700 | 0.36%, 11/09/2009 Δ | 1,700 | ||||||
Caterpillar Financial Services Corp. | ||||||||
900 | 0.88%, 08/20/2010 Δ | 900 | ||||||
1,000 | 4.15%, 01/15/2010 | 1,006 | ||||||
Countrywide Financial Corp. | ||||||||
2,000 | 1.43%, 05/07/2012 Δ | 1,941 | ||||||
79 | 4.50%, 06/15/2010 | 80 | ||||||
162 | 5.80%, 06/07/2012 | 172 | ||||||
General Electric Capital Corp. | ||||||||
1,000 | 0.95%, 08/15/2011 Δ | 978 | ||||||
1,500 | 6.13%, 02/22/2011 | 1,588 | ||||||
8,365 | ||||||||
Nonmetallic Mineral Mining and Quarrying — 0.2% | ||||||||
BHP Billiton Finance USA Ltd. | ||||||||
500 | 5.50%, 04/01/2014 | 549 | ||||||
Office Supplies, Stationery, and Gift Stores — 0.4% | ||||||||
Staples, Inc. | ||||||||
1,000 | 7.75%, 04/01/2011 | 1,074 | ||||||
Oil and Gas Extraction — 2.9% | ||||||||
Anadarko Finance Co. | ||||||||
750 | 6.75%, 05/01/2011 | 800 | ||||||
Anadarko Petroleum Corp. | ||||||||
194 | 5.75%, 06/15/2014 | 209 | ||||||
Devon Energy Corp. | ||||||||
1,100 | 6.88%, 09/30/2011 | 1,200 | ||||||
EnCana Corp. | ||||||||
1,000 | 6.30%, 11/01/2011 | 1,083 | ||||||
Husky Energy, Inc. | ||||||||
1,000 | 6.25%, 06/15/2012 | 1,086 | ||||||
Kerr-McGee Corp. | ||||||||
535 | 6.88%, 09/15/2011 | 579 | ||||||
Shell International Finance B.V. | ||||||||
1,000 | 4.00%, 03/21/2014 | 1,051 | ||||||
500 | 5.63%, 06/27/2011 | 538 | ||||||
Statoilhydro ASA | ||||||||
391 | 3.88%, 04/15/2014 | 410 | ||||||
XTO Energy, Inc. | ||||||||
1,000 | 7.50%, 04/15/2012 | 1,114 | ||||||
8,070 | ||||||||
Oilseed and Grain Farming — 0.1% | ||||||||
Husky Energy, Inc. | ||||||||
239 | 5.90%, 06/15/2014 | 260 | ||||||
Other Financial Investment Activities — 1.3% | ||||||||
BAE Systems Holdings, Inc. | ||||||||
2,000 | 6.40%, 12/15/2011 ■ | 2,141 | ||||||
BP Capital Markets plc | ||||||||
526 | 1.55%, 08/11/2011 | 534 | ||||||
1,000 | 3.13%, 03/10/2012 | 1,034 | ||||||
3,709 | ||||||||
Other Food Manufacturing — 0.5% | ||||||||
Kraft Foods, Inc. | ||||||||
500 | 5.63%, 11/01/2011 | 533 | ||||||
Unilever Capital Corp. | ||||||||
1,000 | 7.13%, 11/01/2010 | 1,066 | ||||||
1,599 | ||||||||
Other General Merchandise Stores — 0.3% | ||||||||
Wal-Mart Stores, Inc. | ||||||||
1,000 | 3.20%, 05/15/2014 | 1,025 | ||||||
8
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 68.4% — (continued) | ||||||||
Other Miscellaneous Manufacturing — 0.7% | ||||||||
Tyco International Group S.A. | ||||||||
$ | 2,000 | 6.38%, 10/15/2011 | $ | 2,160 | ||||
Petroleum and Coal Products Manufacturing — 1.6% | ||||||||
Amerada Hess Corp. | ||||||||
300 | 6.65%, 08/15/2011 | 323 | ||||||
Chevron Corp. | ||||||||
1,000 | 3.45%, 03/03/2012 | 1,049 | ||||||
ConocoPhillips | ||||||||
1,000 | 4.60%, 01/15/2015 | 1,073 | ||||||
Hess Corp. | ||||||||
500 | 7.00%, 02/15/2014 | 563 | ||||||
Valero Energy Corp. | ||||||||
1,520 | 6.88%, 04/15/2012 | 1,656 | ||||||
4,664 | ||||||||
Pharmaceutical & Medicine Manufacturing — 0.4% | ||||||||
Wyeth | ||||||||
1,000 | 6.95%, 03/15/2011 | 1,077 | ||||||
Pharmaceutical and Medicine Manufacturing — 1.7% | ||||||||
AstraZeneca plc | ||||||||
1,750 | 5.40%, 09/15/2012 | 1,929 | ||||||
Eli Lilly & Co. | ||||||||
1,164 | 3.55%, 03/06/2012 | 1,219 | ||||||
Merck & Co., Inc. | ||||||||
705 | 1.88%, 06/30/2011 | 714 | ||||||
Pfizer, Inc. | ||||||||
1,000 | 4.45%, 03/15/2012 | 1,060 | ||||||
4,922 | ||||||||
Pipeline Transportation of Natural Gas — 0.9% | ||||||||
Enterprise Products Operating L.P. | ||||||||
1,275 | 7.50%, 02/01/2011 | 1,355 | ||||||
Kinder Morgan Energy Partners L.P. | ||||||||
150 | 5.63%, 02/15/2015 | 161 | ||||||
1,000 | 6.75%, 03/15/2011 | 1,065 | ||||||
2,581 | ||||||||
Rail Transportation — 1.0% | ||||||||
Canadian Pacific Railway Co. | ||||||||
740 | 6.25%, 10/15/2011 | 790 | ||||||
Norfolk Southern Corp. | ||||||||
365 | 8.63%, 05/15/2010 | 380 | ||||||
Union Pacific Corp. | ||||||||
1,000 | 6.13%, 01/15/2012 | 1,077 | ||||||
500 | 6.65%, 01/15/2011 | 528 | ||||||
2,775 | ||||||||
Real Estate Credit (Mortgage Banking) — 0.6% | ||||||||
Countrywide Home Loans, Inc. | ||||||||
98 | 4.00%, 03/22/2011 | 100 | ||||||
First Union National Bank Commercial Mortgage | ||||||||
1,500 | 7.80%, 08/18/2010 | 1,575 | ||||||
1,675 | ||||||||
�� | Residential Building Construction — 0.4% | |||||||
CRH America, Inc. | ||||||||
1,000 | 5.30%, 10/15/2013 | 1,039 | ||||||
Resin, Synthetic Rubber, Filaments Manufacturing — 0.2% | ||||||||
Dow Chemical Co. | ||||||||
650 | 4.85%, 08/15/2012 | 677 | ||||||
Securities and Commodity Contracts and Brokerage — 5.0% | ||||||||
Credit Suisse First Boston USA, Inc. | ||||||||
2,000 | 4.13%, 01/15/2010 | 2,014 | ||||||
Goldman Sachs Group, Inc. | ||||||||
1,000 | 5.30%, 02/14/2012 | 1,064 | ||||||
243 | 6.00%, 05/01/2014 | 267 | ||||||
1,000 | 6.88%, 01/15/2011 | 1,064 | ||||||
J.P. Morgan Chase & Co. | ||||||||
1,000 | 0.63%, 06/13/2016 Δ | 931 | ||||||
JP Morgan Chase & Co. | ||||||||
1,500 | 4.65%, 06/01/2014 | 1,582 | ||||||
1,810 | 6.75%, 02/01/2011 | 1,915 | ||||||
Merrill Lynch & Co., Inc. | ||||||||
2,000 | 0.71%, 03/23/2010 Δ | 2,000 | ||||||
720 | 0.73%, 12/04/2009 Δ | 720 | ||||||
Morgan Stanley | ||||||||
1,200 | 0.41%, 05/07/2010 Δ | 1,199 | ||||||
375 | 1.09%, 05/07/2010 Δ | 375 | ||||||
1,000 | 5.75%, 08/31/2012 | 1,072 | ||||||
14,203 | ||||||||
Soap, Cleaning Compound and Toilet Manufacturing — 0.4% | ||||||||
Clorox Co. | ||||||||
1,000 | 6.13%, 02/01/2011 | 1,058 | ||||||
Software Publishers — 0.9% | ||||||||
Microsoft Corp. | ||||||||
465 | 2.95%, 06/01/2014 | 472 | ||||||
Oracle Corp. | ||||||||
974 | 3.75%, 07/08/2014 | 1,012 | ||||||
1,000 | 5.00%, 01/15/2011 | 1,047 | ||||||
2,531 | ||||||||
Sovereign Foreign Governments — 0.7% | ||||||||
Ontario (Province of) | ||||||||
1,000 | 1.17%, 05/22/2012 Δ | 1,010 | ||||||
Quebec (Province of) | ||||||||
1,000 | 6.13%, 01/22/2011 | 1,063 | ||||||
2,073 | ||||||||
Support Activities For Mining — 0.4% | ||||||||
Weatherford International Ltd. | ||||||||
1,000 | 5.95%, 06/15/2012 | 1,075 | ||||||
Telecommunications — Other — 1.4% | ||||||||
France Telecom S.A. | ||||||||
435 | 4.38%, 07/08/2014 | 459 | ||||||
1,500 | 7.75%, 03/01/2011 Δ | 1,622 | ||||||
Telecom Italia Capital | ||||||||
1,000 | 1.12%, 07/18/2011 Δ | 991 | ||||||
750 | 4.00%, 01/15/2010 | 754 | ||||||
3,826 | ||||||||
Telecommunications — Wired Carriers — 1.1% | ||||||||
AT&T, Inc. | ||||||||
1,000 | 5.88%, 02/01/2012 | 1,082 | ||||||
Deutsche Telekom International Finance B.V. | ||||||||
1,000 | 8.50%, 06/15/2010 Δ | 1,045 | ||||||
Royal KPN N.V. | ||||||||
1,000 | 8.00%, 10/01/2010 | 1,060 | ||||||
3,187 | ||||||||
9
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | ||||||||||||
CORPORATE BONDS: INVESTMENT GRADE — 68.4% — (continued) | |||||||||||||
Telecommunications — Wireless Carriers — 1.1% | |||||||||||||
Comcast Cable Communications, Inc. | |||||||||||||
$ | 1,000 | 6.75%, 01/30/2011 | $ | 1,062 | |||||||||
Vodafone Group plc | |||||||||||||
1,000 | 5.35%, 02/27/2012 | 1,067 | |||||||||||
1,000 | 7.75%, 02/15/2010 | 1,020 | |||||||||||
3,149 | |||||||||||||
Telecommunications Resellers — 0.6% | |||||||||||||
Telefonica Europe B.V. | |||||||||||||
1,500 | 7.75%, 09/15/2010 | 1,584 | |||||||||||
Tobacco Manufacturing — 0.2% | |||||||||||||
Altria Group, Inc. | |||||||||||||
500 | 7.75%, 02/06/2014 | 571 | |||||||||||
Waste Treatment and Disposal — 0.6% | |||||||||||||
Allied Waste North America, Inc. | |||||||||||||
1,000 | 5.75%, 02/15/2011 | 1,051 | |||||||||||
500 | 6.50%, 11/15/2010 | 517 | |||||||||||
1,568 | |||||||||||||
Wireless Communications Services — 2.6% | |||||||||||||
Cingular Wireless Services, Inc. | |||||||||||||
500 | 7.88%, 03/01/2011 | 542 | |||||||||||
Embarq Corp. | |||||||||||||
1,000 | 6.74%, 06/01/2013 | 1,085 | |||||||||||
Rogers Communications, Inc. | |||||||||||||
1,250 | 9.63%, 05/01/2011 | 1,383 | |||||||||||
Telus Corp. | |||||||||||||
1,500 | 8.00%, 06/01/2011 | 1,635 | |||||||||||
Verizon Wireless | |||||||||||||
1,500 | 5.25%, 02/01/2012 ■ | 1,603 | |||||||||||
Verizon Wireless Capital | |||||||||||||
1,000 | 3.75%, 05/20/2011 ■ | 1,034 | |||||||||||
7,282 | |||||||||||||
Total corporate bonds: investment grade (cost $187,519) | $ | 192,489 | |||||||||||
U.S. GOVERNMENT AGENCIES — 1.6% | |||||||||||||
Federal Home Loan Mortgage Corporation — 0.5% | |||||||||||||
$ | 1,316 | 6.00%, 09/15/2032 | $ | 1,336 | |||||||||
Federal National Mortgage Association — 0.6% | |||||||||||||
1,668 | 5.50%, 05/25/2014 | 1,725 | |||||||||||
Government National Mortgage Association — 0.5% | |||||||||||||
1,412 | 6.50%, 05/16/2031 | 1,538 | |||||||||||
Total U.S. government agencies (cost $4,465) | $ | 4,599 | |||||||||||
U.S. GOVERNMENT SECURITIES — 0.7% | |||||||||||||
U.S. Treasury Securities — 0.7% | |||||||||||||
U.S. Treasury Notes — 0.7% | |||||||||||||
$ | 2,000 | 2.00%, 09/30/2010 | $ | 2,030 | |||||||||
Total U.S. government securities (cost $2,002) | $ | 2,030 | |||||||||||
Total long-term investments (cost $265,348) | $ | 262,203 | |||||||||||
SHORT-TERM INVESTMENTS — 5.1% | |||||||||||||
Commercial Paper — 5.1% | |||||||||||||
Finance and Insurance — 1.3% | |||||||||||||
European Investment Bank | |||||||||||||
$ | 316 | 0.10%, 11/4/2009o | $ | 316 | |||||||||
Societe Generale NA | |||||||||||||
3,377 | 0.16%, 11/12/2009o | 3,377 | |||||||||||
3,693 | |||||||||||||
Food Manufacturing — 0.7% | |||||||||||||
Kraft Foods, Inc. | |||||||||||||
1,948 | 0.30%, 11/3/2009o | 1,948 | |||||||||||
Paper Manufacturing — 1.8% | |||||||||||||
Bemis Co., Inc. | |||||||||||||
5,054 | 0.12%, 11/2/2009o | 5,054 | |||||||||||
Petroleum and Coal Products Manufacturing — 1.3% | |||||||||||||
Devon Energy Corp. | |||||||||||||
3,499 | 0.22%, 11/9/2009■o | 3,499 | |||||||||||
14,194 | |||||||||||||
Total short-term investments (cost $14,194) | $ | 14,194 | |||||||||||
Total investments (cost $279,542)▲ | 98.2 | % | $ | 276,397 | |||||||||
Other assets and liabilities | 1.8 | % | 5,187 | ||||||||||
Total net assets | 100.0 | % | $ | 281,584 | |||||||||
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 16.7% of total net assets at October 31, 2009. |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $279,542 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 7,919 | ||
Unrealized Depreciation | (11,064 | ) | ||
Net Unrealized Depreciation | $ | (3,145 | ) | |
10
† | 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 October 31, 2009, was $2,730, which represents 0.97% 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 October 31, 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 October 31, 2009, was $42,602, which represents 15.13% of total net assets. |
► | The interest rates disclosed for interest only strips represent effective yields based upon estimated future cash flows at October 31, 2009. |
o | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. | |
Ψ | The company is in bankruptcy. The investment held by the fund is current with respect to interest payments. |
⌂ | 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 | |||||||
05/2007 - 02/2009 | $ | 5,841 | Bayview Commercial Asset Trust, 7.00%, 07/25/2037 - 144A | $ | 797 | |||||
12/2006 - 03/2009 | $ | 10,592 | Bayview Commercial Asset Trust, 7.18%, 01/25/2037 - 144A | 971 | ||||||
08/2007 | $ | 9,837 | Bayview Commercial Asset Trust, 7.50%, 09/25/2037 - 144A | 1,332 | ||||||
11/2006 | $ | 901 | Bayview Financial Acquisition Trust, 4.91%, 02/25/2033 - 144A | 887 | ||||||
12/2004 | $ | 18,959 | Bear Stearns Commercial Mortgage Securities, Inc., 4.12%, 11/11/2041 | 287 | ||||||
03/2005 - 08/2007 | $ | 48,676 | Bear Stearns Commercial Mortgage Securities, Inc., 4.65%, 02/11/2041 | 314 | ||||||
12/2005 | $ | 104,991 | Bear Stearns Commercial Mortgage Securities, Inc., 6.25%, 12/11/2040 - 144A | 359 | ||||||
11/2006 - 08/2007 | $ | 9,563 | CBA Commercial Small Balance Commercial Mortgage, 3.00%, 01/25/2039 - 144A | 817 | ||||||
10/2007 - 11/2007 | $ | 16,655 | CBA Commercial Small Balance Commercial Mortgage, 4.79%, 12/25/2036 - 144A | — | ||||||
04/2006 - 08/2007 | $ | 17,389 | CBA Commercial Small Balance Commercial Mortgage, 7.00%, 07/25/2035 - 06/25/2038 - 144A | 79 | ||||||
10/2006 | $ | 1,500 | Commercial Mortgage Pass-Through Certificates, 0.74%, 12/15/2020 - 144A | 1,500 | ||||||
03/2004 - 08/2006 | $ | 2,256 | Commercial Mortgage Pass-Through Certificates, 3.59%, 03/10/2039 - 144A | 28 | ||||||
08/2004 - 08/2006 | $ | 9,004 | CS First Boston Mortgage Securities Corp., 4.17%, 07/15/2036 - 144A | 108 | ||||||
07/2004 | $ | 14,266 | Goldman Sachs Mortgage Securities Corp. II, 4.38%, 08/10/2038 - 144A | 75 | ||||||
03/2006 - 08/2009 | $ | 37 | Hasco NIM Trust, 0.00%, 12/26/2035 - 144A | 36 | ||||||
03/2006 | $ | 1,181 | JP Morgan Chase Commercial Mortgage Securities Corp., 1.04%, 02/15/2020 - 144A | 1,180 | ||||||
12/2006 - 08/2007 | $ | 15,248 | LaSalle Commercial Mortgage Securities, 6.20%, 09/20/2043 - 144A | 379 | ||||||
09/2006 - 07/2007 | $ | 1,014 | Lehman Brothers Small Balance Commercial, 6.77%, 09/27/2036 - 144A | 1,013 | ||||||
09/2004 | $ | 11,617 | Merrill Lynch Mortgage Trust, 3.81%, 08/12/2039 - 144A | 175 | ||||||
11/2004 - 08/2006 | $ | 13,559 | Merrill Lynch Mortgage Trust, 3.96%, 10/12/2041 - 144A | 252 | ||||||
03/2005 | $ | 18,034 | Merrill Lynch Mortgage Trust, 4.67%, 09/12/2042 | 109 | ||||||
04/2007 | $ | 13 | Nationstar Home Equity Loan Trust, 0.00%, 03/25/2037 - 144A | 13 | ||||||
10/2006 - 11/2006 | $ | 1,000 | North Street Referenced Linked Notes, 1.19%, 04/28/2011 - 144A | 987 | ||||||
11/2006 | $ | 500 | North Street Referenced Linked Notes, 1.54%, 04/28/2011 - 144A | 483 | ||||||
03/2007 | $ | 108 | Renaissance Home Equity Loan Trust, 0.00%, 04/25/2037 - 144A | 108 | ||||||
11/2006 | $ | 16,945 | Washington Mutual, Inc., 7.00%, 11/23/2043 - 144A | 654 |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
11
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Asset & Commercial Mortgage Backed Securities | $ | 63,085 | $ | — | $ | 54,139 | $ | 8,946 | ||||||||
Corporate Bonds: Investment Grade | 192,489 | — | 192,489 | — | ||||||||||||
U.S. Government Agencies | 4,599 | — | 4,599 | — | ||||||||||||
U.S. Government Securities | 2,030 | — | 2,030 | — | ||||||||||||
Short-Term Investments | 14,194 | — | 14,194 | — | ||||||||||||
Total | $ | 276,397 | $ | — | $ | 267,451 | $ | 8,946 | ||||||||
Balance as of | Change in | Transfers In | Balance as of | |||||||||||||||||||||
October 31, | Realized Gain | Unrealized | and/or Out of | October 31, | ||||||||||||||||||||
2008 | (Loss) | Depreciation | Net Sales | Level 3 | 2009 | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Asset & Commercial Mortgage Backed Securities | $ | 19,239 | $ | (2,500 | ) | $ | (1,308 | )* | $ | (2,110 | ) | $ | (4,375 | ) | $ | 8,946 | ||||||||
Total | $ | 19,239 | $ | (2,500 | ) | $ | (1,308 | ) | $ | (2,110 | ) | $ | (4,375 | ) | $ | 8,946 | ||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $(1,365). |
12
Assets: | ||||
Investments in securities, at market value (cost $279,542) | $ | 276,397 | ||
Cash | 6 | |||
Receivables: | ||||
Fund shares sold | 3,600 | |||
Dividends and interest | 2,650 | |||
Other assets | 68 | |||
Total assets | 282,721 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 1,003 | |||
Investment management fees | 21 | |||
Dividends | 61 | |||
Distribution fees | 15 | |||
Accrued expenses | 37 | |||
Total liabilities | 1,137 | |||
Net assets | $ | 281,584 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 289,723 | |||
Accumulated undistributed net investment income | 131 | |||
Accumulated net realized loss on investments | (5,125 | ) | ||
Unrealized depreciation of investments | (3,145 | ) | ||
Net assets | $ | 281,584 | ||
Shares authorized | 300,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 9.62/$9.92 | ||
Shares outstanding | 13,050 | |||
Net assets | $ | 125,549 | ||
Class B: Net asset value per share | $ | 9.62 | ||
Shares outstanding | 969 | |||
Net assets | $ | 9,322 | ||
Class C: Net asset value per share | $ | 9.62 | ||
Shares outstanding | 5,499 | |||
Net assets | $ | 52,909 | ||
Class Y: Net asset value per share | $ | 9.60 | ||
Shares outstanding | 9,767 | |||
Net assets | $ | 93,804 | ||
13
Investment Income: | ||||
Interest | $ | 9,345 | ||
Total investment income | 9,345 | |||
Expenses: | ||||
Investment management fees | 948 | |||
Transfer agent fees | 164 | |||
Distribution fees | ||||
Class A | 187 | |||
Class B | 76 | |||
Class C | 327 | |||
Custodian fees | 4 | |||
Accounting services fees | 38 | |||
Registration and filing fees | 61 | |||
Board of Directors’ fees | 7 | |||
Audit fees. | 13 | |||
Other expenses | 44 | |||
Total expenses (before waivers and fees paid indirectly) | 1,869 | |||
Expense waivers | (20 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (20 | ) | ||
Total expenses, net | 1,849 | |||
Net Investment Income | 7,496 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (1,978 | ) | ||
Net Realized Loss on Investments | (1,978 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 12,281 | |||
Net Changes in Unrealized Appreciation of Investments | 12,281 | |||
Net Gain on Investments | 10,303 | |||
Net Increase in Net Assets Resulting from Operations | $ | 17,799 | ||
14
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 7,496 | $ | 8,317 | ||||
Net realized loss on investments | (1,978 | ) | (750 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 12,281 | (13,330 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 17,799 | (5,763 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (2,593 | ) | (1,537 | ) | ||||
Class B | (211 | ) | (173 | ) | ||||
Class C | (907 | ) | (771 | ) | ||||
Class Y | (3,764 | ) | (5,747 | ) | ||||
Total distributions | (7,475 | ) | (8,228 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 74,593 | 14,905 | ||||||
Class B | 3,087 | (131 | ) | |||||
Class C | 24,514 | 6,112 | ||||||
Class Y | (17,807 | ) | (25,523 | ) | ||||
Net increase (decrease) from capital share transactions | 84,387 | (4,637 | ) | |||||
Net Increase (Decrease) In Net Assets | 94,711 | (18,628 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 186,873 | 205,501 | ||||||
End of period | $ | 281,584 | $ | 186,873 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 131 | $ | 105 | ||||
15
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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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. 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 |
16
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 Valuation Time. 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 using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Securities for which prices are not available from an independent pricing service may be 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 generally 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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. |
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. |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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. To minimize counterparty risk, the 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 October 31, 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. | |||
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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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 October 31, 2009, the Fund had no outstanding when-issued or delayed delivery securities. | ||
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 |
18
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 — 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. | ||
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) | 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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 7,449 | $ | 8,250 |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
Amount | ||||
Undistributed Ordinary Income | $ | 201 | ||
Accumulated Capital Losses * | (5,125 | ) | ||
Unrealized Depreciation † | (3,145 | ) | ||
Total Accumulated Deficit | $ | (8,069 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase undistributed net investment income by $5 and decrease accumulated net realized loss on investments by $5. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2011 | $ | 221 | ||
2012 | 295 | |||
2013 | 977 | |||
2014 | 731 | |||
2015 | 162 | |||
2016 | 751 | |||
2017 | 1,988 | |||
Total | $ | 5,125 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
20
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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 year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | ||||||||||
Class B Shares | 1.65 | 1.65 | 1.65 | 1.65 | 1.65 | |||||||||||||||
Class C Shares | 1.65 | 1.65 | 1.65 | 1.65 | 1.65 | |||||||||||||||
Class Y Shares | 0.53 | 0.58 | 0.64 | 0.65 | 0.65 |
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $581 and contingent deferred sales charges of $36 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 |
21
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 year ended October 31, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $151 for providing such services. These fees are accrued daily and paid monthly. |
For the year ended October 31, 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 | $ | 159,025 | ||
Sales Proceeds Excluding U.S. Government Obligations | 81,214 | |||
Cost of Purchases for U.S. Government Obligations | 21,138 | |||
Sales Proceeds for U.S. Government Obligations | 30,317 |
For the Year Ended October 31, 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 | 13,360 | 246 | (5,619 | ) | — | 7,987 | 5,432 | 124 | (4,017 | ) | — | 1,539 | ||||||||||||||||||||||||||||
Amount | $ | 124,591 | $ | 2,298 | $ | (52,296 | ) | $ | — | $ | 74,593 | $ | 52,093 | $ | 1,186 | $ | (38,374 | ) | $ | — | $ | 14,905 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 737 | 20 | (423 | ) | — | 334 | 328 | 15 | (354 | ) | — | (11 | ) | |||||||||||||||||||||||||||
Amount | $ | 6,822 | $ | 184 | $ | (3,919 | ) | $ | — | $ | 3,087 | $ | 3,124 | $ | 145 | $ | (3,400 | ) | $ | — | $ | (131 | ) | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 4,529 | 71 | (2,004 | ) | — | 2,596 | 2,886 | 49 | (2,304 | ) | — | 631 | ||||||||||||||||||||||||||||
Amount | $ | 42,410 | $ | 658 | $ | (18,554 | ) | $ | — | $ | 24,514 | $ | 27,690 | $ | 470 | $ | (22,048 | ) | $ | — | $ | 6,112 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,542 | 402 | (3,889 | ) | — | (1,945 | ) | 2,212 | 603 | (5,607 | ) | — | (2,792 | ) | ||||||||||||||||||||||||||
Amount | $ | 14,544 | $ | 3,720 | $ | (36,071 | ) | $ | — | $ | (17,807 | ) | $ | 21,156 | $ | 5,768 | $ | (52,447 | ) | $ | — | $ | (25,523 | ) |
22
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 52 | $ | 476 | |||||
For the Year Ended October 31, 2008 | 49 | $ | 471 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
23
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 9.21 | $ | 0.33 | $ | — | $ | 0.41 | $ | 0.74 | $ | (0.33 | ) | $ | — | $ | — | $ | (0.33 | ) | $ | 0.41 | $ | 9.62 | ||||||||||||||||||||
B | 9.21 | 0.26 | — | 0.41 | 0.67 | (0.26 | ) | — | — | (0.26 | ) | 0.41 | 9.62 | |||||||||||||||||||||||||||||||
C | 9.21 | 0.26 | — | 0.41 | 0.67 | (0.26 | ) | — | — | (0.26 | ) | 0.41 | 9.62 | |||||||||||||||||||||||||||||||
Y | 9.19 | 0.36 | — | 0.41 | 0.77 | (0.36 | ) | — | — | (0.36 | ) | 0.41 | 9.60 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 9.82 | 0.37 | — | (0.62 | ) | (0.25 | ) | (0.36 | ) | — | — | (0.36 | ) | (0.61 | ) | 9.21 | ||||||||||||||||||||||||||||
B | 9.82 | 0.29 | — | (0.61 | ) | (0.32 | ) | (0.29 | ) | — | — | (0.29 | ) | (0.61 | ) | 9.21 | ||||||||||||||||||||||||||||
C | 9.82 | 0.29 | — | (0.61 | ) | (0.32 | ) | (0.29 | ) | — | — | (0.29 | ) | (0.61 | ) | 9.21 | ||||||||||||||||||||||||||||
Y | 9.81 | 0.40 | — | (0.63 | ) | (0.23 | ) | (0.39 | ) | — | — | (0.39 | ) | (0.62 | ) | 9.19 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 9.89 | 0.44 | — | (0.07 | ) | 0.37 | (0.44 | ) | — | — | (0.44 | ) | (0.07 | ) | 9.82 | |||||||||||||||||||||||||||||
B | 9.90 | 0.37 | — | (0.09 | ) | 0.28 | (0.36 | ) | — | — | (0.36 | ) | (0.08 | ) | 9.82 | |||||||||||||||||||||||||||||
C | 9.90 | 0.37 | — | (0.09 | ) | 0.28 | (0.36 | ) | — | — | (0.36 | ) | (0.08 | ) | 9.82 | |||||||||||||||||||||||||||||
Y | 9.88 | 0.47 | — | (0.08 | ) | 0.39 | (0.46 | ) | — | — | (0.46 | ) | (0.07 | ) | 9.81 | |||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 9.85 | 0.35 | — | 0.04 | 0.39 | (0.35 | ) | — | — | (0.35 | ) | 0.04 | 9.89 | |||||||||||||||||||||||||||||||
B | 9.85 | 0.27 | — | 0.05 | 0.32 | (0.27 | ) | — | — | (0.27 | ) | 0.05 | 9.90 | |||||||||||||||||||||||||||||||
C | 9.85 | 0.27 | — | 0.05 | 0.32 | (0.27 | ) | — | — | (0.27 | ) | 0.05 | 9.90 | |||||||||||||||||||||||||||||||
Y | 9.84 | 0.37 | — | 0.04 | 0.41 | (0.37 | ) | — | — | (0.37 | ) | 0.04 | 9.88 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.08 | 0.33 | — | (0.24 | ) | 0.09 | (0.32 | ) | — | — | (0.32 | ) | (0.23 | ) | 9.85 | |||||||||||||||||||||||||||||
B | 10.08 | 0.25 | — | (0.23 | ) | 0.02 | (0.25 | ) | — | — | (0.25 | ) | (0.23 | ) | 9.85 | |||||||||||||||||||||||||||||
C | 10.08 | 0.25 | — | (0.23 | ) | 0.02 | (0.25 | ) | — | — | (0.25 | ) | (0.23 | ) | 9.85 | |||||||||||||||||||||||||||||
Y | 10.07 | 0.35 | — | (0.23 | ) | 0.12 | (0.35 | ) | — | — | (0.35 | ) | (0.23 | ) | 9.84 |
(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. |
24
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||
8.23 | % | $ | 125,549 | 0.91 | % | 0.90 | % | 0.90 | % | 3.50 | % | 56 | % | |||||||||||||||
7.42 | 9,322 | 1.80 | 1.65 | 1.65 | 2.78 | — | ||||||||||||||||||||||
7.42 | 52,909 | 1.65 | 1.65 | 1.65 | 2.78 | — | ||||||||||||||||||||||
8.62 | 93,804 | 0.53 | 0.53 | 0.53 | 3.92 | — | ||||||||||||||||||||||
(2.60 | ) | 46,620 | 0.95 | 0.90 | 0.90 | 3.78 | 73 | |||||||||||||||||||||
(3.33 | ) | 5,846 | 1.84 | 1.65 | 1.65 | 3.06 | — | |||||||||||||||||||||
(3.33 | ) | 26,738 | 1.69 | 1.65 | 1.65 | 3.03 | — | |||||||||||||||||||||
(2.40 | ) | 107,669 | 0.58 | 0.58 | 0.58 | 4.11 | — | |||||||||||||||||||||
3.80 | 34,606 | 1.04 | 0.90 | 0.90 | 4.49 | 68 | ||||||||||||||||||||||
2.91 | 6,349 | 1.90 | 1.65 | 1.65 | 3.73 | — | ||||||||||||||||||||||
2.91 | 22,322 | 1.77 | 1.65 | 1.65 | 3.74 | — | ||||||||||||||||||||||
4.08 | 142,224 | 0.64 | 0.64 | 0.64 | 4.75 | — | ||||||||||||||||||||||
4.02 | 26,726 | 1.10 | 0.90 | 0.90 | 3.53 | 119 | ||||||||||||||||||||||
3.33 | 6,760 | 1.92 | 1.65 | 1.65 | 2.77 | — | ||||||||||||||||||||||
3.33 | 14,382 | 1.83 | 1.65 | 1.65 | 2.76 | — | ||||||||||||||||||||||
4.28 | 102,198 | 0.68 | 0.65 | 0.65 | 3.78 | — | ||||||||||||||||||||||
0.92 | 29,212 | 1.05 | 0.90 | 0.90 | 3.23 | 123 | ||||||||||||||||||||||
0.17 | 8,814 | 1.89 | 1.65 | 1.65 | 2.47 | — | ||||||||||||||||||||||
0.17 | 22,973 | 1.78 | 1.65 | 1.65 | 2.47 | — | ||||||||||||||||||||||
1.18 | 82,439 | 0.67 | 0.65 | 0.65 | 3.53 | — |
25
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
26
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity.
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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.
27
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.
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp.
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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.
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005.
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 from 2005 — 2006.
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009.
28
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987.
Mr. Sloane is a Senior Vice President of Hartford Life. 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.
29
U.S. Treasury* | 4.00 | % | ||
Other Securities | 96.00 | % | ||
Total | 100.00 | % | ||
QII† | 100.00 | % |
* | The income received from federal obligations. | |
† | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.330 | N/A | N/A | 0.330 | ||||||||||||
Class B | 0.260 | N/A | N/A | 0.260 | ||||||||||||
Class C | 0.260 | N/A | N/A | 0.260 | ||||||||||||
Class Y | 0.362 | N/A | N/A | 0.362 |
30
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,072.20 | $ | 4.70 | $ | 1,000.00 | $ | 1,020.67 | $ | 4.58 | 0.90 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,068.20 | $ | 8.60 | $ | 1,000.00 | $ | 1,016.89 | $ | 8.39 | 1.65 | �� | 184 | 365 | |||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,067.00 | $ | 8.60 | $ | 1,000.00 | $ | 1,016.89 | $ | 8.39 | 1.65 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,073.10 | $ | 2.72 | $ | 1,000.00 | $ | 1,022.58 | $ | 2.65 | 0.52 | 184 | 365 |
31
32
33
34
35
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Small Company Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
9 | ||||
10 | ||||
11 | ||||
12 | ||||
13 | ||||
26 | ||||
28 | ||||
29 | ||||
31 | ||||
31 | ||||
32 | ||||
33 | ||||
34 |
(subadvised by Wellington Management Company, LLP Hartford Investment Management Company) | Investment objective — Seeks growth of capital. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | 10 | ||||||||||
Year | Year | Year | ||||||||||
Small Company A# | 6.19 | % | 2.60 | % | 1.75 | % | ||||||
Small Company A## | 0.35 | % | 1.44 | % | 1.18 | % | ||||||
Small Company B# | 5.81 | % | 1.94 | % | NA* | |||||||
Small Company B## | 0.81 | % | 1.62 | % | NA* | |||||||
Small Company C# | 5.38 | % | 1.83 | % | 1.02 | % | ||||||
Small Company C## | 4.38 | % | 1.83 | % | 1.02 | % | ||||||
Small Company I# | 6.45 | % | 2.78 | % | 1.84 | % | ||||||
Small Company R3# | 5.83 | % | 2.64 | % | 2.01 | % | ||||||
Small Company R4# | 6.22 | % | 2.85 | % | 2.11 | % | ||||||
Small Company R5# | 6.47 | % | 3.00 | % | 2.19 | % | ||||||
Small Company Y# | 6.67 | % | 3.08 | % | 2.23 | % | ||||||
Russell 2000 Growth Index | 11.34 | % | 0.95 | % | 0.12 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year 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. Classes 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 10/31/09, which excludes investment transactions as of this date. | |
(5) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. |
Portfolio Managers | ||||
Wellington Management Company, LLP | Hartford Investment Management Company | |||
Steven C. Angeli, CFA | Mario E. Abularach, CFA, CMT | Hugh Whelan, CFA | ||
Senior Vice President, Partner | Vice President | Managing Director | ||
Stephen C. Mortimer | Kurt Cubbage, CFA | |||
Senior Vice President | Vice President |
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 0.3 | % | ||
Banks (Financials) | 0.8 | |||
Capital Goods (Industrials) | 7.2 | |||
Commercial & Professional Services (Industrials) | 3.5 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 8.3 | |||
Consumer Services (Consumer Discretionary) | 6.0 | |||
Diversified Financials (Financials) | 1.4 | |||
Energy (Energy) | 3.5 | |||
Food & Staples Retailing (Consumer Staples) | 0.4 | |||
Food, Beverage & Tobacco (Consumer Staples) | 2.3 | |||
Health Care Equipment & Services (Health Care) | 11.2 | |||
Household & Personal Products (Consumer Staples) | 2.2 | |||
Insurance (Financials) | 1.3 | |||
Materials (Materials) | 3.6 | |||
Media (Consumer Discretionary) | 1.4 | |||
Other Investment Pools and Funds (Financials) | 0.4 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 8.3 | |||
Real Estate (Financials) | 1.1 | |||
Retailing (Consumer Discretionary) | 5.7 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 5.4 | |||
Software & Services (Information Technology) | 12.5 | |||
Technology Hardware & Equipment (Information Technology) | 6.9 | |||
Telecommunication Services (Services) | 1.8 | |||
Transportation (Industrials) | 2.8 | |||
Utilities (Utilities) | 0.3 | |||
Short-Term Investments | 2.4 | |||
Other Assets and Liabilities | (1.0 | ) | ||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 98.2% | ||||||||
Automobiles & Components — 0.3% | ||||||||
113 | Cooper Tire & Rubber Co. | $ | 1,717 | |||||
36 | Standard Motor Products | 297 | ||||||
2,014 | ||||||||
Banks — 0.8% | ||||||||
172 | Signature Bank • | 5,429 | ||||||
5,429 | ||||||||
Capital Goods — 7.2% | ||||||||
313 | Advanced Battery Technologies, Inc. • | 1,052 | ||||||
36 | Applied Signal Technology | 735 | ||||||
21 | AZZ, Inc. • | 723 | ||||||
296 | BE Aerospace, Inc. • | 5,254 | ||||||
88 | Beacon Roofing Supply, Inc. • | 1,260 | ||||||
71 | Chart Industries, Inc. • | 1,411 | ||||||
67 | China Fire & Security Group • | 946 | ||||||
37 | Cubic Corp. | 1,279 | ||||||
64 | EMCOR Group, Inc. • | 1,513 | ||||||
22 | Heico Corp. | 833 | ||||||
107 | Kennametal, Inc. | 2,521 | ||||||
105 | Lennox International, Inc. | 3,530 | ||||||
22 | Middleby Corp.• | 983 | ||||||
393 | Mueller Water Products, Inc. | 1,762 | ||||||
22 | Nordson Corp. | 1,153 | ||||||
67 | Orbital Sciences Corp. • | 867 | ||||||
62 | Orion Marine Group, Inc. • | 1,187 | ||||||
33 | Pentair, Inc. | 969 | ||||||
17 | Powell Industries, Inc. • | 624 | ||||||
132 | Regal-Beloit Corp. | 6,171 | ||||||
154 | Rush Enterprises, Inc. • | 1,678 | ||||||
31 | Simpson Manufacturing Co., Inc. | 731 | ||||||
31 | SMA Solar Technology AG | 2,942 | ||||||
101 | Teledyne Technologies, Inc. • | 3,444 | ||||||
37 | Trex Co., Inc. • | 584 | ||||||
30 | Watsco, Inc. | 1,535 | ||||||
46 | Woodward Governor Co. | 1,086 | ||||||
46,773 | ||||||||
Commercial & Professional Services — 3.5% | ||||||||
44 | APAC TeleServices, Inc. • | 286 | ||||||
331 | Corrections Corp. of America • | 7,932 | ||||||
12 | Healthcare Services Group, Inc. | 241 | ||||||
129 | Herman Miller, Inc. | 1,999 | ||||||
50 | HNI Corp. | 1,318 | ||||||
190 | Knoll, Inc. | 1,864 | ||||||
243 | Sykes Enterprises, Inc. • | 5,773 | ||||||
64 | Tetra Tech, Inc. • | 1,657 | ||||||
22 | Watson Wyatt Worldwide, Inc. | 965 | ||||||
22,035 | ||||||||
Consumer Durables & Apparel — 8.3% | ||||||||
262 | Carter’s, Inc. • | 6,187 | ||||||
12 | Deckers Outdoor Corp • | 1,089 | ||||||
62 | Fossil, Inc. • | 1,651 | ||||||
444 | Hanesbrands, Inc. • | 9,602 | ||||||
303 | Jarden Corp. | 8,308 | ||||||
39 | Lululemon Athletica, Inc. • | 987 | ||||||
16 | Oxford Industries, Inc. | 309 | ||||||
25 | Polaris Industries, Inc. | 1,049 | ||||||
547 | Rossi Residencial S.A. | 3,609 | ||||||
227 | Smith & Wesson Holding Corp. • | 972 | ||||||
31 | Steven Madden Ltd. • | 1,246 | ||||||
88 | Sturm Ruger & Co., Inc. | 939 | ||||||
135 | Tempur-Pedic International, Inc. • | 2,613 | ||||||
38 | True Religion Apparel, Inc. • | 967 | ||||||
97 | Tupperware Brands Corp. | 4,362 | ||||||
36 | Under Armour, Inc. Class A • | 977 | ||||||
193 | Warnaco Group, Inc. • | 7,828 | ||||||
48 | Wolverine World Wide, Inc. | 1,236 | ||||||
53,931 | ||||||||
Consumer Services — 6.0% | ||||||||
172 | Bally Technologies, Inc. • | 6,768 | ||||||
159 | Brinks Home Security Holding • | 4,917 | ||||||
44 | Buffalo Wild Wings, Inc. • | 1,820 | ||||||
15 | Capella Education Co. • | 1,033 | ||||||
238 | Cheesecake Factory, Inc. • | 4,323 | ||||||
89 | Coinstar, Inc. • | 2,822 | ||||||
471 | Corinthian Colleges, Inc. • | 7,475 | ||||||
16 | K12, Inc. • | 259 | ||||||
176 | Life Time Fitness, Inc. • | 3,795 | ||||||
53 | Lincoln Educational Services Corp.• | 1,044 | ||||||
37 | P. F. Chang’s China Bistro, Inc. • | 1,088 | ||||||
66 | Shuffle Master, Inc. • | 517 | ||||||
80 | WMS Industries, Inc. • | 3,202 | ||||||
39,063 | ||||||||
Diversified Financials — 1.4% | ||||||||
65 | Ezcorp, Inc. • | 837 | ||||||
44 | First Cash Financial Services, Inc. • | 763 | ||||||
311 | GFI Group, Inc. | 1,602 | ||||||
101 | Knight Capital Group, Inc. • | 1,700 | ||||||
109 | optionsXpress Holdings, Inc. | 1,697 | ||||||
50 | Stifel Financial • | 2,603 | ||||||
9,202 | ||||||||
Energy — 3.5% | ||||||||
93 | Cal Dive International, Inc. • | 714 | ||||||
32 | Carbo Ceramics, Inc. | 1,870 | ||||||
176 | Complete Production Services, Inc. • | 1,675 | ||||||
27 | Dril-Quip, Inc. • | 1,292 | ||||||
56 | James River Coal Co. • | 1,055 | ||||||
179 | Karoon Gas Australia Ltd. • | 1,209 | ||||||
21 | Lufkin Industries, Inc. | 1,176 | ||||||
106 | Massey Energy Co. | 3,077 | ||||||
59 | Matrix Service Co. • | 519 | ||||||
23 | NATCO Group, Inc. • | 1,023 | ||||||
82 | Overseas Shipholding Group, Inc. | 3,234 | ||||||
93 | St. Mary Land & Exploration Co. | 3,162 | ||||||
81 | Willbros Group, Inc. • | 1,059 | ||||||
38 | World Fuel Services Corp. | 1,938 | ||||||
23,003 | ||||||||
Food & Staples Retailing — 0.4% | ||||||||
47 | Casey’s General Stores, Inc. | 1,493 | ||||||
49 | United Natural Foods, Inc. • | 1,193 | ||||||
2,686 | ||||||||
Food, Beverage & Tobacco — 2.3% | ||||||||
36 | American Italian Pasta Co. • | 967 | ||||||
71 | Cental Euro Distribution Corp. • | 2,215 | ||||||
371 | Cott Corp. • | 2,930 | ||||||
25 | Diamond Foods, Inc. | 744 | ||||||
57 | Green Mountain Coffee Roasters • | 3,799 | ||||||
16 | J&J Snack Foods Corp. | 622 | ||||||
30 | Lancaster Colony Corp. | 1,474 | ||||||
34 | Sanderson Farms, Inc. | 1,240 | ||||||
76 | Zhongpin, Inc. • | 1,005 | ||||||
14,996 | ||||||||
4
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 98.2% — (continued) | ||||||||
Health Care Equipment & Services — 11.2% | ||||||||
39 | Abaxis, Inc. • | $ | 901 | |||||
137 | Align Technology, Inc. • | 2,153 | ||||||
214 | Allscripts-Misys Healthcare Solutions, Inc. | 4,164 | ||||||
77 | Almost Family, Inc. • | 2,331 | ||||||
26 | Amedisys, Inc. • | 1,037 | ||||||
124 | American Medical Systems Holdings• | 1,908 | ||||||
36 | Athenahealth, Inc. • | 1,344 | ||||||
77 | Bioscrip, Inc. • | 579 | ||||||
46 | Catalyst Health Solutions • | 1,451 | ||||||
102 | Clarient, Inc. • | 332 | ||||||
66 | Eclipsys Corp. • | 1,233 | ||||||
31 | Emergency Medical Services • | 1,490 | ||||||
23 | Haemonetics Corp. • | 1,166 | ||||||
240 | Health Net, Inc. • | 3,572 | ||||||
327 | HealthSouth Corp. • | 4,777 | ||||||
32 | HMS Holdings Corp. • | 1,356 | ||||||
208 | Hologic, Inc. • | 3,077 | ||||||
11 | ICU Medical, Inc. • | 401 | ||||||
51 | Immucor, Inc. • | 913 | ||||||
106 | Inverness Medical Innovation, Inc. • | 4,031 | ||||||
1 | Landauer, Inc. | 65 | ||||||
65 | Masimo Corp. • | 1,727 | ||||||
81 | MedAssets, Inc. • | 1,771 | ||||||
39 | Meridian Bioscience, Inc. | 865 | ||||||
50 | NuVasive, Inc. • | 1,820 | ||||||
110 | Owens & Minor, Inc. | 4,515 | ||||||
53 | Palomar Medical Technologies, Inc. • | 542 | ||||||
52 | PharMerica Corp. • | 801 | ||||||
49 | Providence Service Corp. • | 608 | ||||||
93 | PSS World Medical, Inc. • | 1,889 | ||||||
170 | Psychiatric Solutions, Inc. • | 3,515 | ||||||
26 | Quality Systems | 1,617 | ||||||
27 | Rehabcare Group, Inc. • | 511 | ||||||
45 | Sirona Dental Systems, Inc. • | 1,201 | ||||||
66 | STERIS Corp. | 1,944 | ||||||
125 | SXC Health Solutions Corp. • | 5,719 | ||||||
51 | Thoratec Corp. • | 1,344 | ||||||
301 | Volcano Corp. • | 4,325 | ||||||
72,995 | ||||||||
Household & Personal Products — 2.2% | ||||||||
276 | American Oriental Bioengineering, Inc. • | 1,093 | ||||||
18 | Chattem, Inc. • | 1,114 | ||||||
28 | Female Health Co. • | 130 | ||||||
185 | Herbalife Ltd. | 6,226 | ||||||
196 | Medifast, Inc. • | 4,308 | ||||||
50 | Nu Skin Enterprises, Inc. Class A | 1,129 | ||||||
4 | Usana Health Sciences, Inc. • | 125 | ||||||
14,125 | ||||||||
Insurance — 1.3% | ||||||||
66 | Allied World Assurance Holdings Ltd. | 2,965 | ||||||
29 | Assured Guaranty Ltd. | 483 | ||||||
223 | Lancashire Holdings Ltd. | 1,848 | ||||||
71 | Platinum Underwriters Holdings Ltd. | 2,556 | ||||||
17 | RLI Corp. | 846 | ||||||
8,698 | ||||||||
Materials — 3.6% | ||||||||
21 | Clearwater Paper Corp. • | 953 | ||||||
88 | Cytec Industries, Inc. | 2,913 | ||||||
61 | Eagle Materials, Inc. | 1,522 | ||||||
601 | Huabao International Holdings Ltd. | 573 | ||||||
160 | Intrepid Potash, Inc. • | 4,109 | ||||||
35 | Koppers Holdings, Inc. | 925 | ||||||
38 | LSB Industries, Inc. • | 474 | ||||||
18 | Newmarket Corp. | 1,674 | ||||||
30 | Rock Tenn Co. Class A . | 1,308 | ||||||
128 | Scotts Miracle-Gro Co. Class A | 5,211 | ||||||
20 | Silgan Holdings, Inc. | 1,075 | ||||||
9 | Stepan Co. | 504 | ||||||
95 | Stillwater Mining Co. • | 589 | ||||||
42 | W.R. Grace & Co. • | 911 | ||||||
22,741 | ||||||||
Media — 1.4% | ||||||||
127 | DreamWorks Animation SKG, Inc. • | 4,074 | ||||||
263 | Focus Media Holding Ltd. ADR • | 3,163 | ||||||
83 | Valassis Communications, Inc. • | 1,510 | ||||||
8,747 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 8.3% | ||||||||
380 | Alkermes, Inc. • | 3,032 | ||||||
114 | Auxilium Pharmaceuticals, Inc. • | 3,586 | ||||||
154 | Celera Corp. • | 950 | ||||||
30 | Cephalon, Inc. • | 1,636 | ||||||
209 | Cubist Pharmaceuticals, Inc. • | 3,541 | ||||||
40 | Emergent Biosolutions, Inc. • | 579 | ||||||
93 | Enzon, Inc. • | 779 | ||||||
93 | Exelixis, Inc. • | 566 | ||||||
27 | Genomic Health, Inc. • | 499 | ||||||
56 | Hi-Technology Pharmacal Co., Inc. • | 1,029 | ||||||
152 | Human Genome Sciences, Inc. • | 2,841 | ||||||
250 | Icon plc ADR • | 6,171 | ||||||
84 | Impax Laboratories, Inc. • | 742 | ||||||
90 | Isis Pharmaceuticals, Inc. • | 1,146 | ||||||
67 | Martek Biosciences Corp. • | 1,204 | ||||||
61 | Medicis Pharmaceutical Corp. Class A | 1,284 | ||||||
127 | Nektar Therapeutics • | 1,035 | ||||||
125 | Onyx Pharmaceuticals, Inc. • | 3,318 | ||||||
93 | OSI Pharmaceuticals, Inc. • | 3,003 | ||||||
263 | PAREXEL International Corp. • | 3,298 | ||||||
233 | PDL Biopharma, Inc. | 1,962 | ||||||
144 | Questcor Pharmaceuticals • | 655 | ||||||
189 | Regeneron Pharmaceuticals, Inc. • | 2,964 | ||||||
150 | Sciclone Pharmaceuticals, Inc. • | 370 | ||||||
210 | Seattle Genetics, Inc. • | 1,903 | ||||||
62 | United Therapeutics Corp. • | 2,616 | ||||||
58 | Vertex Pharmaceuticals, Inc. • | 1,950 | ||||||
119 | VIVUS, Inc. • | 944 | ||||||
53,603 | ||||||||
Real Estate — 1.1% | ||||||||
145 | BR Malls Participacoes S.A. • | 1,559 | ||||||
101 | Diamondrock Hospitality | 767 | ||||||
26 | Equity Lifestyle Properties, Inc. | 1,192 | ||||||
41 | LTC Properties, Inc. | 982 | ||||||
25 | PS Business Parks, Inc. | 1,231 | ||||||
40 | Tanger Factory Outlet Center | 1,519 | ||||||
7,250 | ||||||||
Retailing — 5.7% | ||||||||
88 | 99 Cents Only Stores • | 998 | ||||||
148 | Advance Automotive Parts, Inc. | 5,522 | ||||||
131 | Aeropostale, Inc. • | 4,906 | ||||||
162 | Big Lots, Inc. • | 4,059 | ||||||
20 | Blue Nile, Inc. • | 1,209 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 98.2% — (continued) | ||||||||
Retailing — 5.7% — (continued) | ||||||||
37 | Cato Corp. • | $ | 739 | |||||
16 | Core-Mark Holding Co. Inc. • | 450 | ||||||
68 | Dick’s Sporting Goods, Inc. • | 1,544 | ||||||
42 | Gymboree Corp.• | 1,779 | ||||||
74 | J. Crew Group, Inc. • | 3,029 | ||||||
33 | Joseph A. Bank Clothiers, Inc. • | 1,364 | ||||||
65 | Kirklands, Inc. • | 821 | ||||||
141 | Lumber Liquidators, Inc. • | 3,001 | ||||||
312 | OfficeMax, Inc. | 3,563 | ||||||
65 | PetMed Express, Inc. | 1,018 | ||||||
29 | The Buckle, Inc. | 869 | ||||||
39 | Tractor Supply Co. • | 1,725 | ||||||
36,596 | ||||||||
Semiconductors & Semiconductor Equipment — 5.4% | ||||||||
178 | Amkor Technology, Inc. • | 980 | ||||||
177 | Atheros Communications, Inc. • | 4,369 | ||||||
81 | Cavium Networks, Inc. • | 1,537 | ||||||
39 | Cypress Semiconductor Corp. • | 330 | ||||||
50 | FEI Co. • | 1,194 | ||||||
38 | Hittite Microwave Corp. • | 1,396 | ||||||
62 | Microsemi Corp. • | 822 | ||||||
27 | Netlogic Microsystems, Inc. • | 1,042 | ||||||
20 | NVE Corp. • | 758 | ||||||
588 | ON Semiconductor Corp. • | 3,933 | ||||||
1,362 | RF Micro Devices, Inc. • | 5,422 | ||||||
65 | Semtech Corp. • | 1,003 | ||||||
560 | Skyworks Solutions, Inc. • | 5,842 | ||||||
72 | Tessera Technologies, Inc. • | 1,596 | ||||||
859 | TriQuint Semiconductor, Inc. • | 4,627 | ||||||
34,851 | ||||||||
Software & Services — 12.5% | ||||||||
112 | Acxiom Corp. • | 1,280 | ||||||
34 | Advent Software, Inc. • | 1,313 | ||||||
48 | ArcSight, Inc. • | 1,180 | ||||||
98 | Ariba, Inc. • | 1,160 | ||||||
255 | Art Technology Group, Inc. • | 1,051 | ||||||
46 | Blackbaud, Inc. | 1,020 | ||||||
32 | Blackboard, Inc. • | 1,134 | ||||||
49 | Commvault Systems, Inc. • | 959 | ||||||
42 | Concur Technologies, Inc.• | 1,483 | ||||||
171 | Constant Contact, Inc. • | 2,825 | ||||||
67 | CyberSource Corp. • | 1,101 | ||||||
65 | DealerTrack Holdings, Inc. • | 1,073 | ||||||
27 | Digital River, Inc. • | 613 | ||||||
74 | Equinix, Inc. • | 6,343 | ||||||
66 | Gartner, Inc. Class A • | 1,226 | ||||||
100 | Global Cash Access, Inc. • | 631 | ||||||
46 | i2 Technologies, Inc. • | 718 | ||||||
98 | Informatica Corp. • | 2,070 | ||||||
70 | j2 Global Communications, Inc. • | 1,433 | ||||||
106 | Jack Henry & Associates, Inc. | 2,454 | ||||||
50 | JDA Software Group, Inc. • | 1,001 | ||||||
157 | Lawson Software, Inc. • | 989 | ||||||
32 | Manhattan Associates, Inc. • | 738 | ||||||
43 | Mercadolibre, Inc. • | 1,527 | ||||||
253 | Neustar, Inc. • | 5,854 | ||||||
39 | North American Equity | 342 | ||||||
98 | Parametric Technology Corp. • | 1,467 | ||||||
41 | Pegasystems, Inc . | 1,182 | ||||||
304 | Rackspace Hosting, Inc. • | 5,094 | ||||||
195 | Red Hat, Inc. • | 5,040 | ||||||
88 | S1 Corp. • | 529 | ||||||
68 | Smith Micro Software, Inc. • | 616 | ||||||
73 | Solera Holdings, Inc. | 2,352 | ||||||
72 | SonicWALL, Inc. • | 575 | ||||||
66 | SuccessFactors, Inc. • | 1,016 | ||||||
28 | Syntel, Inc. | 1,021 | ||||||
290 | Take-Two Interactive Software, Inc. • | 3,177 | ||||||
41 | Taleo Corp. Class A . • | 893 | ||||||
65 | TeleTech Holdings, Inc . • | 1,162 | ||||||
208 | Tibco Software, Inc. • | 1,816 | ||||||
403 | TiVo, Inc. • | 4,381 | ||||||
114 | Valueclick, Inc. • | 1,125 | ||||||
50 | Vistaprint N.V. • | 2,575 | ||||||
155 | Vocus, Inc. • | 2,807 | ||||||
78 | Websense, Inc. • | 1,252 | ||||||
79 | Wright Express Corp. • | 2,194 | ||||||
81,792 | ||||||||
Technology Hardware & Equipment — 6.9% | ||||||||
625 | 3Com Corp. • | 3,213 | ||||||
39 | Acme Packet, Inc. • | 382 | ||||||
44 | ADTRAN, Inc. | 1,017 | ||||||
148 | Arris Group, Inc. • | 1,524 | ||||||
40 | Blue Coat Systems, Inc. • | 881 | ||||||
133 | Brightpoint, Inc. • | 978 | ||||||
35 | Checkpoint Systems, Inc. • | 481 | ||||||
12 | Cogent, Inc. • | 114 | ||||||
30 | Comtech Telecommunications Corp. • | 973 | ||||||
24 | Harmonic, Inc. • | 129 | ||||||
32 | Itron, Inc. • | 1,903 | ||||||
445 | Jabil Circuit, Inc. | 5,956 | ||||||
1 | Multi-Fineline Electronix, Inc. • | 37 | ||||||
8 | Osi Systems, Inc. • | 162 | ||||||
79 | Palm, Inc. • | 922 | ||||||
63 | Plantronics, Inc. | 1,525 | ||||||
159 | Plexus Corp. • | 4,023 | ||||||
89 | Polycom, Inc. • | 1,920 | ||||||
214 | QLogic Corp. • | 3,762 | ||||||
198 | Riverbed Technology, Inc. • | 4,060 | ||||||
541 | Seagate Technology | 7,544 | ||||||
51 | Starent Networks Corp. • | 1,725 | ||||||
308 | Tellabs, Inc. • | 1,855 | ||||||
45,086 | ||||||||
Telecommunication Services — 1.8% | ||||||||
248 | Centennial Cellular Corp. Class A • | 2,099 | ||||||
211 | Cincinnati Bell, Inc. • | 649 | ||||||
28 | Consolidated Communications Holdings, Inc. | 386 | ||||||
22 | Iowa Telecommunications Services, Inc. | 264 | ||||||
65 | Neutral Tandem, Inc. • | 1,365 | ||||||
104 | PAETEC Holding Corp. • | 337 | ||||||
14 | Premiere Global Services, Inc. • | 103 | ||||||
172 | SBA Communications Corp.• | 4,864 | ||||||
66 | Syniverse Holdings, Inc. • | 1,139 | ||||||
29 | Virgin Mobile USA, Inc. • | 117 | ||||||
11,323 | ||||||||
Transportation — 2.8% | ||||||||
125 | Avis Budget Group, Inc. • | 1,051 | ||||||
102 | Con-way, Inc. | 3,353 |
6
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 98.2% — (continued) | ||||||||||||
Transportation — 2.8% — (continued) | ||||||||||||
59 | Copa Holdings S.A. Class A | $ | 2,473 | |||||||||
131 | Hawaiian Holdings, Inc.• | 925 | ||||||||||
99 | J.B. Hunt Transport Services, Inc. | 2,981 | ||||||||||
356 | Localiza Rent a Car S.A. | 3,724 | ||||||||||
279 | Tam S.A. • | 3,978 | ||||||||||
18,485 | ||||||||||||
Utilities — 0.3% | ||||||||||||
47 | New Jersey Resources Corp. | 1,638 | ||||||||||
Total common stocks (cost $583,768) | $ | 637,062 | ||||||||||
EXCHANGE TRADED FUNDS — 0.4% | ||||||||||||
Other Investment Pools and Funds - 0.4% | ||||||||||||
44 | iShares Russell 2000 Growth Index Fund | $ | 2,713 | |||||||||
Total exchange traded funds (cost $2,418) | $ | 2,713 | ||||||||||
Total long-term investments (cost $586,186) | $ | 639,775 | ||||||||||
SHORT-TERM INVESTMENTS — 2.4% | ||||||||||||
Repurchase Agreements — 2.3% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $382, collateralized by GNMA 5.00%, 2039, value of $390) | ||||||||||||
$ | 382 | 0.08%, 10/30/2009 | $ | 382 | ||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 11/02/2009 in the amount of $2,749, collateralized by U.S. Treasury Bond 5.25% — 7.88%, 2021 — 2029, value of $2,847) | ||||||||||||
2,749 | 0.06%, 10/30/2009 | 2,749 | ||||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $2,238, collateralized by FHLMC 4.00% — 7.00%, 2011 — 2039, FNMA 4.00% — 7.00%, 2017 — 2047, value of $2,283) | ||||||||||||
2,238 | 0.08%, 10/30/2009 | 2,238 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $2,493, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $2,543) | ||||||||||||
2,493 | 0.08%, 10/30/2009 | 2,493 | ||||||||||
RBS Greenwich Capital Markets TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,383, collateralized by U.S. Treasury Bond 5.00%, 2037, U.S. Treasury Note 3.13% — 4.63%, 2013 — 2017, value of $1,410) | ||||||||||||
1,383 | 0.06%, 10/30/2009 | 1,383 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $25, collateralized by U.S. Treasury Note 2.75%, 2013, value of $26) | ||||||||||||
25 | 0.05%, 10/30/2009 | 25 | ||||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,266, collateralized by U.S. Treasury Note 1.50%, 2010, value of $1,284) | ||||||||||||
1,266 | 0.04%, 10/30/2009 | 1,266 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $4,320, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $4,406) | ||||||||||||
4,320 | 0.07%, 10/30/2009 | 4,320 | ||||||||||
14,856 | ||||||||||||
U.S. Treasury Bills — 0.1% | ||||||||||||
520 | 0.07%, 1/14/2010 □o | 520 | ||||||||||
Total short-term investments (cost $15,376) | $ | 15,376 | ||||||||||
Total investments (cost $601,562)▲ | 101.0 | % | $ | 655,151 | ||||||||
Other assets and liabilities | (1.0 | )% | (6,289 | ) | ||||||||
Total net assets | 100.0 | % | $ | 648,862 | ||||||||
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 6.1% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $615,760 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 80,425 | ||
Unrealized Depreciation | (41,034 | ) | ||
Net Unrealized Appreciation | $ | 39,391 | ||
• | Currently non-income producing. | |
o | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. |
7
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
□ | Security pledged as initial margin deposit for open futures contracts at October 31, 2009. |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
Russell 2000 Mini | 89 | Long | Dec 2009 | $ | (262 | ) | ||||||||||
* | The number of contracts does not omit 000’s. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Hong Kong Dollar (Buy) | $ | 580 | $ | 580 | 11/03/09 | $ | — | |||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
8
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 637,062 | $ | 630,490 | $ | 6,572 | $ | — | ||||||||
Exchange Traded Funds | 2,713 | 2,713 | — | — | ||||||||||||
Short-Term Investments | 15,376 | — | 15,376 | — | ||||||||||||
Total | $ | 655,151 | $ | 633,203 | $ | 21,948 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 262 | $ | 262 | $ | — | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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. |
9
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $601,562) | $ | 655,151 | ||
Cash | 1 | |||
Foreign currency on deposit with custodian (cost$—) | — | |||
Receivables: | ||||
Investment securities sold | 5,534 | |||
Fund shares sold | 941 | |||
Dividends and interest | 95 | |||
Other assets | 104 | |||
Total assets | 661,826 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | — | |||
Payables: | ||||
Investment securities purchased | 11,263 | |||
Fund shares redeemed | 1,276 | |||
Investment management fees | 89 | |||
Distribution fees | 24 | |||
Variation margin | 128 | |||
Accrued expenses | 184 | |||
Total liabilities | 12,964 | |||
Net assets | $ | 648,862 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 838,241 | |||
Accumulated net investment loss | (192 | ) | ||
Accumulated net realized loss on investments and foreign currency transactions | (242,515 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 53,328 | |||
Net assets | $ | 648,862 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 13.90/$14.71 | ||
Shares outstanding | 19,845 | |||
Net assets | $ | 275,834 | ||
Class B: Net asset value per share | $ | 12.39 | ||
Shares outstanding | 1,305 | |||
Net assets | $ | 16,169 | ||
Class C: Net asset value per share | $ | 12.34 | ||
Shares outstanding | 3,085 | |||
Net assets | $ | 38,082 | ||
Class I: Net asset value per share | $ | 14.03 | ||
Shares outstanding | 1,163 | |||
Net assets | $ | 16,312 | ||
Class R3: Net asset value per share | $ | 14.70 | ||
Shares outstanding | 872 | |||
Net assets | $ | 12,822 | ||
Class R4: Net asset value per share | $ | 14.85 | ||
Shares outstanding | 2,123 | |||
Net assets | $ | 31,532 | ||
Class R5: Net asset value per share | $ | 14.97 | ||
Shares outstanding | 827 | |||
Net assets | $ | 12,384 | ||
Class Y: Net asset value per share | $ | 15.03 | ||
Shares outstanding | 16,346 | |||
Net assets | $ | 245,727 | ||
10
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 3,460 | ||
Interest | 13 | |||
Securities lending | 49 | |||
Less: Foreign tax withheld | (34 | ) | ||
Total investment income | 3,488 | |||
Expenses: | ||||
Investment management fees | 4,614 | |||
Administrative services fees | 62 | |||
Transfer agent fees | 1,287 | |||
Distribution fees | ||||
Class A | 630 | |||
Class B | 170 | |||
Class C | 368 | |||
Class R3 | 39 | |||
Class R4 | 63 | |||
Custodian fees | 45 | |||
Accounting services fees | 91 | |||
Registration and filing fees | 112 | |||
Board of Directors’ fees | 16 | |||
Audit fees | 25 | |||
Other expenses | 208 | |||
Total expenses (before waivers and fees paid indirectly) | 7,730 | |||
Expense waivers | (489 | ) | ||
Transfer agent fee waivers | (316 | ) | ||
Commission recapture | (156 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (961 | ) | ||
Total expenses, net | 6,769 | |||
Net Investment Loss | (3,281 | ) | ||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (147,491 | ) | ||
Net realized gain on futures | 1,707 | |||
Net realized loss on forward foreign currency contracts | (114 | ) | ||
Net realized gain on other foreign currency transactions | 82 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (145,816 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 192,687 | |||
Net unrealized depreciation of futures | (456 | ) | ||
Net unrealized appreciation of forward foreign currency contracts | 1 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 1 | |||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions | 192,233 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 46,417 | |||
Net Increase in Net Assets Resulting from Operations | $ | 43,136 | ||
11
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment loss | $ | (3,281 | ) | $ | (2,066 | ) | ||
Net realized loss on investments, other financial instruments and foreign currency transactions | (145,816 | ) | (94,199 | ) | ||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 192,233 | (215,903 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 43,136 | (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 | (12,824 | ) | 159,043 | |||||
Class B | (5,342 | ) | (8,767 | ) | ||||
Class C | (4,668 | ) | 12,119 | |||||
Class I | 3,846 | 13,691 | ||||||
Class R3 | 8,423 | 4,087 | ||||||
Class R4 | 10,059 | 18,065 | ||||||
Class R5 | 3,991 | 10,131 | ||||||
Class Y | 58,600 | 89,740 | ||||||
Net increase from capital share transactions | 62,085 | 298,109 | ||||||
Net Increase (Decrease) In Net Assets | 105,221 | (80,937 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 543,641 | 624,578 | ||||||
End of period | $ | 648,862 | $ | 543,641 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | (192 | ) | $ | — | |||
12
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
13
October 31, 2009
(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. 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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Securities for which prices are not available from an independent pricing service may be 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 generally valued at amortized cost, which approximates market value. | |||
Exchange-traded equity securities are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s Valuation Time. | |||
Options contracts on securities, currencies, indices, futures contracts, commodities and other instruments shall be valued at their last reported sale 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 sale price at the Valuation Time on another exchange or market where it did trade. If it is not possible to determine the last reported sale price on the Primary Market or another 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. Absent both bid and asked prices on such exchange, the bid price may be used. | |||
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 and asked prices as of the Valuation Time. |
14
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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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”) or 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 may use 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 |
16
investments in indexed securities as of October 31, 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 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. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||
Foreign exchange contracts | Unrealized depreciation on forward foreign currency contracts | $ | — | |||||||
Equity contracts | Summary of Net Assets — Unrealized depreciation | 262 |
17
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | (114 | ) | $ | — | $ | (114 | ) | ||||||||||
Equity contracts | — | — | 1,707 | — | — | 1,707 | ||||||||||||||||||
Total | $ | — | $ | — | $ | 1,707 | $ | (114 | ) | $ | — | $ | 1,593 | |||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Foreign exchange contracts | — | — | — | 1 | — | $ | 1 | |||||||||||||||||
Equity contracts | — | — | (456 | ) | — | — | (456 | ) | ||||||||||||||||
Total | $ | — | $ | — | $ | (456 | ) | $ | 1 | $ | — | $ | (455 | ) | ||||||||||
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. | Futures and Options: |
Futures and Options Transactions — The Fund is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset 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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of October 31, 2009. | |||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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. |
18
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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. As of October 31, 2009, there were no outstanding purchased or written option contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | — | $ | 43,260 | ||||
Long-Term Capital Gains * | — | 23,618 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
19
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Accumulated Capital Losses * | $ | (228,771 | ) | |
Unrealized Appreciation † | 39,392 | |||
Total Accumulated Deficit | $ | (189,379 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase accumulated undistributed net investment income by $3,089, increase accumulated net realized gain on investments by $275, and decrease paid-in-capital by $3,364. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 87,693 | ||
2017 | 141,078 | |||
Total | $ | 228,771 |
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
5. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
20
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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 a non-interest-bearing custody account. For the year ended October 31, 2009, these amounts are included in the Statement of Operations. |
21
Notes to Financial Statements — (continued)
October 31, 2009
(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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.29 | % | 1.38 | % | 1.39 | % | 1.37 | % | 1.35 | % | ||||||||||
Class B Shares | 1.73 | 2.01 | 2.11 | 2.12 | 2.10 | |||||||||||||||
Class C Shares | 2.01 | 2.14 | 2.14 | 2.11 | 2.10 | |||||||||||||||
Class I Shares | 1.09 | 1.15 | 1.12 | 1.10 | * | |||||||||||||||
Class R3 Shares | 1.62 | 1.65 | 1.65 | † | ||||||||||||||||
Class R4 Shares | 1.28 | 1.28 | 1.36 | † | ||||||||||||||||
Class R5 Shares | 1.02 | 0.99 | 1.10 | † | ||||||||||||||||
Class Y Shares | 0.88 | 0.88 | 0.90 | 0.91 | 0.92 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006. | |
† | 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $362 and contingent deferred sales charges of $30 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was in |
22
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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $990 for providing such services. These fees are accrued daily and paid monthly. | |||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. 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 year ended October 31, 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 | $ | 1,061,345 | ||
Sales Proceeds Excluding U.S. Government Obligations | 999,306 |
23
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 6,962 | — | (8,084 | ) | — | (1,122 | ) | 11,324 | 1,490 | (4,107 | ) | — | 8,707 | |||||||||||||||||||||||||||
Amount | $ | 84,120 | $ | — | $ | (96,944 | ) | $ | — | $ | (12,824 | ) | $ | 201,298 | $ | 30,285 | $ | (72,540 | ) | $ | — | $ | 159,043 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 120 | — | (609 | ) | — | (489 | ) | 203 | 317 | (1,083 | ) | — | (563 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,300 | $ | — | $ | (6,642 | ) | $ | — | $ | (5,342 | ) | $ | 3,295 | $ | 5,795 | $ | (17,857 | ) | $ | — | $ | (8,767 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 604 | — | (1,047 | ) | — | (443 | ) | 1,097 | 366 | (787 | ) | — | 676 | |||||||||||||||||||||||||||
Amount | $ | 6,484 | $ | — | $ | (11,152 | ) | $ | — | $ | (4,668 | ) | $ | 17,871 | $ | 6,702 | $ | (12,454 | ) | $ | — | $ | 12,119 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 789 | — | (530 | ) | — | 259 | 1,008 | 20 | (282 | ) | — | 746 | ||||||||||||||||||||||||||||
Amount | $ | 10,152 | $ | — | $ | (6,306 | ) | $ | — | $ | 3,846 | $ | 17,944 | $ | 406 | $ | (4,659 | ) | $ | — | $ | 13,691 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 940 | — | (283 | ) | — | 657 | 273 | 1 | (66 | ) | — | 208 | ||||||||||||||||||||||||||||
Amount | $ | 12,135 | $ | — | $ | (3,712 | ) | $ | — | $ | 8,423 | $ | 5,284 | $ | 20 | $ | (1,217 | ) | $ | — | $ | 4,087 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,404 | — | (592 | ) | — | 812 | 1,119 | 47 | (234 | ) | — | 932 | ||||||||||||||||||||||||||||
Amount | $ | 18,261 | $ | — | $ | (8,202 | ) | $ | — | $ | 10,059 | $ | 21,464 | $ | 1,013 | $ | (4,412 | ) | $ | — | $ | 18,065 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 477 | — | (184 | ) | — | 293 | 595 | 3 | (87 | ) | — | 511 | ||||||||||||||||||||||||||||
Amount | $ | 6,409 | $ | — | $ | (2,418 | ) | $ | — | $ | 3,991 | $ | 11,698 | $ | 57 | $ | (1,624 | ) | $ | — | $ | 10,131 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 7,077 | — | (2,520 | ) | — | 4,557 | 4,810 | 901 | (1,388 | ) | — | 4,323 | ||||||||||||||||||||||||||||
Amount | $ | 90,495 | $ | — | $ | (31,895 | ) | $ | — | $ | 58,600 | $ | 93,771 | $ | 19,626 | $ | (23,657 | ) | $ | — | $ | 89,740 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 228 | $ | 2,819 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. |
24
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
25
- Selected Per-Share Data (a) - | ||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 13.09 | $ | (0.08 | ) | $ | — | $ | 0.89 | $ | 0.81 | $ | — | $ | — | $ | — | $ | — | $ | 0.81 | $ | 13.90 | |||||||||||||||||||||
B | 11.71 | (0.12 | ) | — | 0.80 | 0.68 | — | — | — | — | 0.68 | 12.39 | ||||||||||||||||||||||||||||||||
C | 11.71 | (0.15 | ) | — | 0.78 | 0.63 | — | — | — | — | 0.63 | 12.34 | ||||||||||||||||||||||||||||||||
I | 13.18 | (0.06 | ) | — | 0.91 | 0.85 | — | — | — | — | 0.85 | 14.03 | ||||||||||||||||||||||||||||||||
R3 | 13.89 | (0.13 | ) | — | 0.94 | 0.81 | — | — | — | — | 0.81 | 14.70 | ||||||||||||||||||||||||||||||||
R4 | 13.98 | (0.09 | ) | — | 0.96 | 0.87 | — | — | — | — | 0.87 | 14.85 | ||||||||||||||||||||||||||||||||
R5 | 14.06 | (0.06 | ) | — | 0.97 | 0.91 | — | — | — | — | 0.91 | 14.97 | ||||||||||||||||||||||||||||||||
Y | 14.10 | (0.04 | ) | — | 0.97 | 0.93 | — | — | — | — | 0.93 | 15.03 | ||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 24.46 | (0.06 | ) | — | (8.68 | ) | (8.74 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.37 | ) | 13.09 | |||||||||||||||||||||||||||
B | 22.30 | (0.20 | ) | — | (7.76 | ) | (7.96 | ) | — | (2.63 | ) | — | (2.63 | ) | (10.59 | ) | 11.71 | |||||||||||||||||||||||||||
C | 22.32 | (0.18 | ) | — | (7.80 | ) | (7.98 | ) | — | (2.63 | ) | — | (2.63 | ) | (10.61 | ) | 11.71 | |||||||||||||||||||||||||||
I | 24.55 | (0.02 | ) | — | (8.72 | ) | (8.74 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.37 | ) | 13.18 | |||||||||||||||||||||||||||
R3 | 25.83 | (0.07 | ) | — | (9.24 | ) | (9.31 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.94 | ) | 13.89 | |||||||||||||||||||||||||||
R4 | 25.91 | (0.03 | ) | — | (9.27 | ) | (9.30 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.93 | ) | 13.98 | |||||||||||||||||||||||||||
R5 | 25.97 | — | — | (9.28 | ) | (9.28 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.91 | ) | 14.06 | ||||||||||||||||||||||||||||
Y | 26.00 | 0.02 | — | (9.29 | ) | (9.27 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.90 | ) | 14.10 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
B | 19.97 | (0.26 | ) | 0.10 | 4.36 | 4.20 | — | (1.87 | ) | — | (1.87 | ) | 2.33 | 22.30 | ||||||||||||||||||||||||||||||
C | 20.00 | (0.23 | ) | 0.08 | 4.34 | 4.19 | — | (1.87 | ) | — | (1.87 | ) | 2.32 | 22.32 | ||||||||||||||||||||||||||||||
I | 21.59 | (0.01 | ) | — | 4.84 | 4.83 | — | (1.87 | ) | — | (1.87 | ) | 2.96 | 24.55 | ||||||||||||||||||||||||||||||
R3(g) | 21.95 | (0.07 | ) | — | 3.95 | 3.88 | — | — | — | — | 3.88 | 25.83 | ||||||||||||||||||||||||||||||||
R4(g) | 21.95 | (0.03 | ) | — | 3.99 | 3.96 | — | — | — | — | 3.96 | 25.91 | ||||||||||||||||||||||||||||||||
R5(g) | 21.95 | (0.01 | ) | — | 4.03 | 4.02 | — | — | — | — | 4.02 | 25.97 | ||||||||||||||||||||||||||||||||
Y | 22.73 | 0.02 | 0.06 | 5.06 | 5.14 | — | (1.87 | ) | — | (1.87 | ) | 3.27 | 26.00 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 18.45 | (0.18 | ) | — | 3.31 | 3.13 | — | — | — | — | 3.13 | 21.58 | ||||||||||||||||||||||||||||||||
B | 17.20 | (0.36 | ) | — | 3.13 | 2.77 | — | — | — | — | 2.77 | 19.97 | ||||||||||||||||||||||||||||||||
C | 17.22 | (0.32 | ) | — | 3.10 | 2.78 | — | — | — | — | 2.78 | 20.00 | ||||||||||||||||||||||||||||||||
I(j) | 20.70 | (0.01 | ) | — | 0.90 | 0.89 | — | — | — | — | 0.89 | 21.59 | ||||||||||||||||||||||||||||||||
Y | 19.33 | (0.06 | ) | — | 3.46 | 3.40 | — | — | — | — | 3.40 | 22.73 | ||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 15.09 | (0.16 | ) | — | 3.52 | 3.36 | — | — | — | — | 3.36 | 18.45 | ||||||||||||||||||||||||||||||||
B | 14.17 | (0.29 | ) | — | 3.32 | 3.03 | — | — | — | — | 3.03 | 17.20 | ||||||||||||||||||||||||||||||||
C | 14.19 | (0.29 | ) | — | 3.32 | 3.03 | — | — | — | — | 3.03 | 17.22 | ||||||||||||||||||||||||||||||||
Y | 15.74 | (0.07 | ) | — | 3.66 | 3.59 | — | — | — | — | 3.59 | 19.33 |
(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) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Not annualized. | |
(i) | Annualized. | |
(j) | Commenced operations on August 31, 2006. |
26
- Ratios and Supplemental Data - | ||||||||||||||||||||||||
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||
6.19% | $ | 275,834 | 1.53 | % | 1.32 | % | 1.32 | % | (0.67 | )% | 180 | % | ||||||||||||
5.81 | 16,169 | 2.59 | 1.76 | 1.76 | (1.10 | ) | — | |||||||||||||||||
5.38 | 38,082 | 2.31 | 2.04 | 2.04 | (1.39 | ) | — | |||||||||||||||||
6.45 | 16,312 | 1.24 | 1.11 | 1.11 | (0.48 | ) | — | |||||||||||||||||
5.83 | 12,822 | 1.66 | 1.65 | 1.65 | (1.04 | ) | — | |||||||||||||||||
6.22 | 31,532 | 1.31 | 1.31 | 1.31 | (0.67 | ) | — | |||||||||||||||||
6.47 | 12,384 | 1.11 | 1.05 | 1.05 | (0.42 | ) | — | |||||||||||||||||
6.59 | 245,727 | 0.91 | 0.91 | 0.91 | (0.27 | ) | — | |||||||||||||||||
(39.57) | 274,412 | 1.39 | 1.39 | 1.39 | (0.39 | ) | 183 | |||||||||||||||||
(39.95) | 21,008 | 2.31 | 2.02 | 2.02 | (1.01 | ) | — | |||||||||||||||||
(40.01) | 41,294 | 2.15 | 2.15 | 2.15 | (1.14 | ) | — | |||||||||||||||||
(39.41) | 11,912 | 1.19 | 1.15 | 1.15 | (0.15 | ) | — | |||||||||||||||||
(39.69) | 2,990 | 1.66 | 1.65 | 1.65 | (0.68 | ) | — | |||||||||||||||||
(39.51) | 18,332 | 1.29 | 1.29 | 1.29 | (0.29 | ) | — | |||||||||||||||||
(39.32) | 7,510 | 1.00 | 1.00 | 1.00 | (0.01 | ) | — | |||||||||||||||||
(39.23) | 166,183 | 0.89 | 0.89 | 0.89 | 0.12 | — | ||||||||||||||||||
23.88 (f) | 299,819 | 1.41 | 1.40 | 1.40 | (0.44 | ) | 186 | |||||||||||||||||
22.97 (f) | 52,549 | 2.28 | 2.12 | 2.12 | (1.16 | ) | — | |||||||||||||||||
22.88 (f) | 63,650 | 2.15 | 2.15 | 2.15 | (1.19 | ) | — | |||||||||||||||||
24.28 (f) | 3,886 | 1.12 | 1.12 | 1.12 | (0.16 | ) | — | |||||||||||||||||
17.68 (f),(h) | 181 | 1.84 | (i) | 1.65 | (i) | 1.65 | (i) | (0.69 | ) (i) | — | ||||||||||||||
18.04 (f),(h) | 9,809 | 1.34 | (i) | 1.34 | (i) | 1.34 | (i) | (0.54 | )(i) | — | ||||||||||||||
18.31 (f),(h) | 588 | 1.07 | (i) | 1.05 | (i) | 1.05 | (i) | (0.38 | )(i) | — | ||||||||||||||
24.44 (f) | 194,096 | 0.91 | 0.91 | 0.91 | 0.09 | — | ||||||||||||||||||
16.96 | 194,656 | 1.48 | 1.40 | 1.40 | (0.87 | ) | 170 | |||||||||||||||||
16.10 | 52,036 | 2.32 | 2.15 | 2.15 | (1.62 | ) | — | |||||||||||||||||
16.14 | 47,744 | 2.23 | 2.15 | 2.15 | (1.62 | ) | — | |||||||||||||||||
4.30 (h) | 69 | 1.38 | (i) | 1.15 | (i) | 1.15 | (i) | (0.58 | )(i) | — | ||||||||||||||
17.59 | 108,770 | 0.95 | 0.95 | 0.95 | (0.39 | ) | — | |||||||||||||||||
22.27 | 159,577 | 1.57 | 1.40 | 1.40 | (0.88 | ) | 104 | |||||||||||||||||
21.38 | 56,664 | 2.39 | 2.15 | 2.15 | (1.63 | ) | — | |||||||||||||||||
21.35 | 44,564 | 2.30 | 2.15 | 2.15 | (1.63 | ) | — | |||||||||||||||||
22.81 | 43,274 | 0.97 | 0.97 | 0.97 | (0.43 | ) | — |
27
The Hartford Mutual Funds, Inc.
December 15, 2009
28
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
29
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
Robert M. Arena, Jr. (1968) President and Chief Executive Officer since 2009 (served as Vice President of the Fund (2006 — 2009)) Mr. Arena serves as Executive Vice President of Hartford Life. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 — 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009. |
30
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
31
32
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
�� | during the period | during the period | the | Days | |||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,144.00 | $ | 7.24 | $ | 1,000.00 | $ | 1,018.45 | $ | 6.82 | 1.34 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,141.90 | $ | 9.77 | $ | 1,000.00 | $ | 1,016.08 | $ | 9.20 | 1.81 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,139.40 | $ | 11.16 | $ | 1,000.00 | $ | 1,014.77 | $ | 10.51 | 2.07 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,146.20 | $ | 6.17 | $ | 1,000.00 | $ | 1,019.46 | $ | 5.80 | 1.14 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,143.10 | $ | 8.86 | $ | 1,000.00 | $ | 1,016.94 | $ | 8.34 | 1.64 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,144.90 | $ | 7.03 | $ | 1,000.00 | $ | 1,018.65 | $ | 6.61 | 1.30 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,146.20 | $ | 5.63 | $ | 1,000.00 | $ | 1,019.96 | $ | 5.30 | 1.04 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,146.50 | $ | 4.87 | $ | 1,000.00 | $ | 1,020.67 | $ | 4.58 | 0.90 | 184 | 365 |
33
34
35
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
36
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
14 | ||||
15 | ||||
16 | ||||
17 | ||||
18 | ||||
30 | ||||
32 | ||||
33 | ||||
35 | ||||
35 | ||||
36 | ||||
37 | ||||
38 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks a high level of current income. | |
Capital appreciation is a secondary objective. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
Strategic Income A# | 26.24 | % | 1.55 | % | ||||
Strategic Income A## | 20.56 | % | -0.36 | % | ||||
Strategic Income B# | 25.20 | % | 0.74 | % | ||||
Strategic Income B## | 20.20 | % | -0.35 | % | ||||
Strategic Income C# | 25.30 | % | 0.83 | % | ||||
Strategic Income C## | 24.30 | % | 0.83 | % | ||||
Strategic Income I# | 26.65 | % | 1.88 | % | ||||
Strategic Income Y# | 26.69 | % | 2.80 | % | ||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 7.10 | % |
# | 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. | |
(5) | Class Y shares commenced operations on 8/31/07. |
Portfolio Managers | ||||
Michael Bacevich | Mark Niland, CFA | Nasri Toutoungi | ||
Managing Director | Managing Director | Managing Director | ||
Michael Gray, CFA | ||||
Managing Director |
2
as of October 31, 2009
Percentage of | ||||
Long Term | ||||
Rating | Holdings | |||
AAA | 15 .6 | % | ||
AA | 2 .5 | |||
A | 12 .8 | |||
BBB | 20 .1 | |||
BB | 23 .4 | |||
B | 21 .0 | |||
CCC | 3 .4 | |||
C | 0 .1 | |||
D | 1 .0 | |||
Not Rated | 0 .1 | |||
Total | 100.0 | % | ||
3
as of October 31, 2009
Percentage of | ||||
Industry | Net Assets | |||
Accommodation and Food Services | 1.2 | % | ||
Administrative Waste Management and Remediation | 1.2 | |||
Agriculture, Construction, and Mining Machinery | 0.2 | |||
Agriculture, Forestry, Fishing and Hunting | 0.9 | |||
Air Transportation | 0.1 | |||
Arts, Entertainment and Recreation | 4.9 | |||
Beverage and Tobacco Product Manufacturing | 1.3 | |||
Chemical Manufacturing | 2.6 | |||
Computer and Electronic Product Manufacturing | 0.2 | |||
Construction | 1.4 | |||
Educational Services | 0.1 | |||
Electrical Equipment, Appliance Manufacturing | 0.5 | |||
Finance and Insurance | 19.5 | |||
Food Manufacturing | 0.6 | |||
Food Services | 0.3 | |||
Foreign Governments | 6.6 | |||
Health Care and Social Assistance | 5.2 | |||
Information | 10.4 | |||
Long Put Future Option Contract | 0.0 | |||
Machinery Manufacturing | 0.1 | |||
Mining | 3.1 | |||
Miscellaneous Manufacturing | 1.2 | |||
Motor Vehicle & Parts Manufacturing | 1.4 | |||
Nonmetallic Mineral Product Manufacturing | 0.1 | |||
Paper Manufacturing | 0.9 | |||
Petroleum and Coal Products Manufacturing | 8.2 | |||
Pipeline Transportation | 2.2 | |||
Plastics and Rubber Products Manufacturing | 0.2 | |||
Primary Metal Manufacturing | 1.3 | |||
Printing and Related Support Activities | 0.1 | |||
Professional, Scientific and Technical Services | 1.3 | |||
Public Administration | 0.5 | |||
Rail Transportation | 0.1 | |||
Real Estate and Rental and Leasing | 0.8 | |||
Retail Trade | 3.7 | |||
Soap, Cleaning Compound and Toilet Manufacturing | 0.3 | |||
Transit and Ground Passenger Transportation | 0.1 | |||
Transportation | 0.5 | |||
U.S. Government Agencies | 1.7 | |||
U.S. Government Securities | 6.6 | |||
Utilities | 4.8 | |||
Wholesale Trade | 0.4 | |||
Short-Term Investments | 3.4 | |||
Other Assets and Liabilities | (0.2 | ) | ||
Total | 100.0 | % | ||
4
October 31, 2009
Shares or Principal Amount | Market Value ╪ | ||||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES — 7.7% | |||||||||
Finance and Insurance — 7.7% | |||||||||
Ally Automotive Receivables Trust | |||||||||
$ | 200 | 3.00%, 10/15/2015 § | $ | 201 | |||||
Bank of America Automotive Trust | |||||||||
700 | 3.03%, 10/15/2016 § | 709 | |||||||
Bank of America Credit Card Trust | |||||||||
500 | 5.17%, 06/15/2019 | 527 | |||||||
Bayview Commercial Asset Trust | |||||||||
1,195 | 7.50%, 09/25/2037 ⌂ ► | 96 | |||||||
Bayview Financial Acquisition Trust | |||||||||
250 | 8.05%, 08/28/2047 | 53 | |||||||
Bear Stearns Commercial Mortgage Securities, Inc. | |||||||||
475 | 4.68%, 08/13/2039 | 478 | |||||||
940 | 5.12%, 02/11/2041 Δ | 931 | |||||||
3,600 | 5.90%, 09/11/2038 Δ | 3,668 | |||||||
CBA Commercial Small Balance Commercial Mortgage | |||||||||
4,373 | 7.25%, 07/25/2039 ⌂ ► | 372 | |||||||
Citigroup Commercial Mortgage Trust | |||||||||
215 | 5.89%, 12/10/2049 Δ | 157 | |||||||
Citigroup/Deutsche Bank Commercial Mortgage Trust | |||||||||
1,440 | 5.89%, 11/15/2044 | 1,423 | |||||||
Commercial Mortgage Pass-Through Certificates | |||||||||
290 | 4.72%, 03/10/2039 | 287 | |||||||
730 | 5.46%, 07/10/2037 Δ | 733 | |||||||
Credit-Based Asset Servicing and Securitization | |||||||||
82 | 0.51%, 05/25/2036 § Δ | 50 | |||||||
CS First Boston Mortgage Securities Corp. | |||||||||
270 | 5.23%, 12/15/2040 | 269 | |||||||
GE Capital Commercial Mortgage Corp. | |||||||||
580 | 5.05%, 07/10/2045 Δ | 583 | |||||||
GMAC Mortgage Corp. Loan Trust | |||||||||
555 | 6.05%, 12/25/2037 Δ | 320 | |||||||
Greenwich Capital Commercial Funding Corp. | |||||||||
622 | 0.00%, 11/05/2021 ⌂• Δ | 3 | |||||||
1,080 | 4.80%, 08/10/2042 | 1,031 | |||||||
610 | 5.44%, 03/10/2039 Δ | 544 | |||||||
3,500 | 5.74%, 12/10/2049 Δ | 3,220 | |||||||
690 | 6.12%, 07/10/2038 Δ | 662 | |||||||
Honda Automotive Receivables Owner Trust | |||||||||
327 | 5.28%, 01/23/2012 | 332 | |||||||
IMPAC Commercial Mortgage Backed Trust | |||||||||
279 | 1.74%, 02/25/2036 Δ | 114 | |||||||
JP Morgan Chase Commercial Mortgage Securities Corp. | |||||||||
354 | 4.72%, 01/15/2038 | 348 | |||||||
690 | 5.04%, 03/15/2046 Δ | 690 | |||||||
510 | 5.34%, 05/15/2047 | 459 | |||||||
280 | 5.40%, 05/15/2045 | 260 | |||||||
LB-UBS Commercial Mortgage Trust | |||||||||
265 | 4.48%, 10/15/2029 | 259 | |||||||
300 | 5.88%, 06/15/2038 Δ | 296 | |||||||
Lehman Brothers Small Balance Commercial | |||||||||
547 | 5.91%, 06/25/2037 § | 421 | |||||||
MBNA Credit Card Master Note Trust | |||||||||
300 | 6.80%, 07/15/2014 | 312 | |||||||
Merrill Lynch Mortgage Trust | |||||||||
153 | 5.83%, 06/12/2050 Δ | 131 | |||||||
Merrill Lynch/Countrywide Commercial Mortgage Trust | |||||||||
540 | 5.38%, 08/12/2048 | 424 | |||||||
Morgan Stanley Capital I | |||||||||
960 | 4.70%, 07/15/2056 | 948 | |||||||
930 | 5.01%, 01/14/2042 | 942 | |||||||
Renaissance Home Equity Loan Trust | |||||||||
700 | 5.58%, 11/25/2036 Δ | 614 | |||||||
Residential Funding Mortgage Securities, Inc. | |||||||||
1,672 | 6.00%, 07/25/2037 | 1,416 | |||||||
Wachovia Bank Commercial Mortgage Trust | |||||||||
585 | 5.31%, 11/15/2048 | 566 | |||||||
1,075 | 5.34%, 12/15/2043 | 829 | |||||||
290 | 5.41%, 07/15/2041 Δ | 292 | |||||||
Wells Fargo Alternative Loan Trust | |||||||||
570 | 6.25%, 11/25/2037 ⌂ | 418 | |||||||
26,388 | |||||||||
Total asset & commercial mortgage backed securities (cost $25,116) | $ | 26,388 | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 33.4% | |||||||||
Administrative Waste Management and Remediation — 0.4% | |||||||||
Allied Waste North America, Inc. | |||||||||
$ | 500 | 7.13%, 05/15/2016 | $ | 531 | |||||
900 | 7.25%, 03/15/2015 | 946 | |||||||
1,477 | |||||||||
Air Transportation — 0.0% | |||||||||
United Air Lines, Inc. | |||||||||
77 | 7.19%, 04/01/2011 | 77 | |||||||
Arts, Entertainment and Recreation — 0.6% | |||||||||
DirecTV Holdings LLC | |||||||||
1,340 | 7.63%, 05/15/2016 | 1,454 | |||||||
News America Holdings, Inc. | |||||||||
430 | 6.90%, 08/15/2039 § | 456 | |||||||
1,910 | |||||||||
Beverage and Tobacco Product Manufacturing — 1.0% | |||||||||
Altria Group, Inc. | |||||||||
931 | 10.20%, 02/06/2039 | 1,241 | |||||||
Anheuser-Busch Cos., Inc. | |||||||||
570 | 8.20%, 01/15/2039 § | 719 | |||||||
Anheuser-Busch InBev N.V. | |||||||||
1,210 | 7.75%, 01/15/2019 § | 1,410 | |||||||
3,370 | |||||||||
Chemical Manufacturing — 1.0% | |||||||||
Dow Chemical Co. | |||||||||
1,935 | 8.55%, 05/15/2019 | 2,209 | |||||||
Yara International ASA | |||||||||
970 | 7.88%, 06/11/2019 § | 1,106 | |||||||
3,315 | |||||||||
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 33.4% — (continued) | ||||||||
Construction — 0.5% | ||||||||
CRH America, Inc. | ||||||||
$ | 1,340 | 8.13%, 07/15/2018 | $ | 1,547 | ||||
Educational Services ��� 0.1% | ||||||||
President & Fellows of Harvard | ||||||||
336 | 6.00%, 01/15/2019 ■ | 380 | ||||||
Electrical Equipment, Appliance Manufacturing — 0.5% | ||||||||
Controladora Mabe S.A. de C.V. | ||||||||
1,700 | 7.88%, 10/28/2019 ■ | 1,632 | ||||||
Finance and Insurance — 9.8% | ||||||||
Bank of America Corp. | ||||||||
565 | 5.65%, 05/01/2018 | 571 | ||||||
915 | 6.50%, 08/01/2016 | 979 | ||||||
450 | 7.38%, 05/15/2014 | 504 | ||||||
Barclays Bank plc | ||||||||
855 | 6.05%, 12/04/2017 ■ | 871 | ||||||
Capital One Bank | ||||||||
1,715 | 8.80%, 07/15/2019 | 2,031 | ||||||
Citigroup, Inc. | ||||||||
615 | 6.38%, 08/12/2014 | 652 | ||||||
650 | 8.13%, 07/15/2039 | 756 | ||||||
1,061 | 8.50%, 05/22/2019 | 1,240 | ||||||
Comerica Bank | ||||||||
1,400 | 5.75%, 11/21/2016 | 1,319 | ||||||
Corpoacion Andina De Fomento | ||||||||
265 | 8.13%, 06/04/2019 | 315 | ||||||
Goldman Sachs Capital Trust II | ||||||||
2,077 | 5.79%, 06/01/2012 ♠ Δ | 1,545 | ||||||
Guardian Life Insurance Co. | ||||||||
1,446 | 7.38%, 09/30/2039 ■ | 1,461 | ||||||
Jefferies Group, Inc. | ||||||||
1,171 | 8.50%, 07/15/2019 | 1,272 | ||||||
JP Morgan Chase & Co. | ||||||||
520 | 6.30%, 04/23/2019 | 571 | ||||||
JP Morgan Chase Capital II | ||||||||
230 | 0.98%, 02/01/2027 Δ | 163 | ||||||
JP Morgan Chase Capital XXV | ||||||||
595 | 6.80%, 10/01/2037 | 585 | ||||||
Key Bank NA | ||||||||
2,210 | 5.80%, 07/01/2014 | 2,175 | ||||||
965 | 6.95%, 02/01/2028 | 848 | ||||||
Liberty Mutual Group, Inc. | ||||||||
2,240 | 10.75%, 06/15/2058 ■ | 2,352 | ||||||
Manufacturers & Traders Trust Co. | ||||||||
815 | 5.59%, 12/28/2020 | 672 | ||||||
Massachusetts Mutual Life Insurance Co. | ||||||||
415 | 8.88%, 06/01/2039 ■ | 506 | ||||||
MBNA America Bank N.A. | ||||||||
495 | 7.13%, 11/15/2012 | 538 | ||||||
Morgan Stanley | ||||||||
1,450 | 7.30%, 05/13/2019 | 1,625 | ||||||
National City Bank of Ohio | ||||||||
600 | 4.50%, 03/15/2010 | 607 | ||||||
New York Life Insurance Co. | ||||||||
1,417 | 6.75%, 11/15/2039 ■ | 1,437 | ||||||
PNC Preferred Funding Trust II | ||||||||
1,400 | 6.11%, 03/15/2012 ■ ♠ Δ | 948 | ||||||
Progressive Corp. | ||||||||
241 | 6.70%, 06/15/2037 Δ | 211 | ||||||
Prudential Financial, Inc. | ||||||||
282 | 7.38%, 06/15/2019 | 315 | ||||||
Rabobank Netherlands | ||||||||
274 | 11.00%, 06/30/2019 ■ ♠ | 344 | ||||||
Simon Property Group L.P. | ||||||||
454 | 6.75%, 05/15/2014 | 489 | ||||||
State Street Capital Trust III | ||||||||
1,350 | 8.25%, 03/15/2042 Δ | 1,362 | ||||||
Transcapitalinvest Ltd. | ||||||||
1,200 | 5.67%, 03/05/2014 § | 1,182 | ||||||
UBS Preferred Funding Trust I | ||||||||
1,250 | 8.62%, 10/01/2010 ♠ | 1,162 | ||||||
USB Capital IX | ||||||||
1,830 | 6.19%, 04/15/2011 ♠ Δ | 1,405 | ||||||
Wells Fargo Bank NA | ||||||||
600 | 0.65%, 05/16/2016 Δ | 519 | ||||||
33,532 | ||||||||
Foreign Governments — 3.3% | ||||||||
Banco Nacional De Desenvolvimento | ||||||||
235 | 6.50%, 06/10/2019 ■ | 247 | ||||||
Brazil (Republic of) | ||||||||
1,015 | 8.00%, 01/15/2018 | 1,160 | ||||||
Colombia (Republic of) | ||||||||
725 | 7.38%, 03/18/2019 | 820 | ||||||
El Salvador (Republic of) | ||||||||
991 | 7.65%, 06/15/2035 § | 991 | ||||||
Hungary (Republic of) | ||||||||
680 | 4.75%, 02/03/2015 | 673 | ||||||
Lithuania (Republic of) | ||||||||
1,650 | 6.75%, 01/15/2015 ■ | 1,660 | ||||||
Peru (Republic of) | ||||||||
1,920 | 6.55%, 03/14/2037 | 1,997 | ||||||
South Africa (Republic of) | ||||||||
1,630 | 5.88%, 05/30/2022 | 1,716 | ||||||
200 | 6.88%, 05/27/2019 | 223 | ||||||
United Mexican States | ||||||||
1,846 | 5.95%, 03/19/2019 | 1,929 | ||||||
11,416 | ||||||||
Health Care and Social Assistance — 1.6% | ||||||||
Amgen, Inc. | ||||||||
252 | 6.40%, 02/01/2039 | 287 | ||||||
Covidien International | ||||||||
1,500 | 6.55%, 10/15/2037 | 1,748 | ||||||
CVS Corp. | ||||||||
1,335 | 8.35%, 07/10/2031 ■ | 1,516 | ||||||
Pfizer, Inc. | ||||||||
590 | 6.20%, 03/15/2019 | 672 | ||||||
615 | 7.20%, 03/15/2039 | 773 | ||||||
Roche Holdings, Inc. | ||||||||
279 | 7.00%, 03/01/2039 ■ | 343 | ||||||
5,339 | ||||||||
Information — 3.6% | ||||||||
AT&T, Inc. | ||||||||
600 | 6.55%, 02/15/2039 | 649 | ||||||
Cingular Wireless Services, Inc. | ||||||||
590 | 8.75%, 03/01/2031 | 778 | ||||||
Embarq Corp. | ||||||||
2,700 | 8.00%, 06/01/2036 | 2,794 |
6
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 33.4% — (continued) | ||||||||
Information — 3.6% — (continued) | ||||||||
Hanaro Telecom, Inc. | ||||||||
$ | 460 | 7.00%, 02/01/2012 ■ | $ | 478 | ||||
Qwest Corp. | ||||||||
1,440 | 7.25%, 10/15/2035 | 1,195 | ||||||
Rogers Cable, Inc. | ||||||||
390 | 8.75%, 05/01/2032 | 501 | ||||||
Rogers Communications, Inc. | ||||||||
1,273 | 7.50%, 03/15/2015 | 1,480 | ||||||
Telecom Italia Capital | ||||||||
346 | 7.18%, 06/18/2019 | 384 | ||||||
1,104 | 7.72%, 06/04/2038 | 1,280 | ||||||
Time Warner Cable, Inc. | ||||||||
900 | 8.25%, 04/01/2019 | 1,083 | ||||||
Verizon Wireless | ||||||||
1,312 | 8.50%, 11/15/2018 ■ | 1,634 | ||||||
12,256 | ||||||||
Mining — 1.2% | ||||||||
Anglo American Capital plc | ||||||||
1,112 | 9.38%, 04/08/2014 — 04/08/2019 ■ | 1,304 | ||||||
Barrick Gold Corp. | ||||||||
570 | 6.95%, 04/01/2019 | 651 | ||||||
Consol Energy, Inc. | ||||||||
430 | 7.88%, 03/01/2012 | 457 | ||||||
Rio Tinto Finance USA Ltd. | ||||||||
1,150 | 5.88%, 07/15/2013 | 1,239 | ||||||
320 | 9.00%, 05/01/2019 | 398 | ||||||
4,049 | ||||||||
Miscellaneous Manufacturing — 0.8% | ||||||||
Meccanica Holdings USA, Inc. | ||||||||
1,626 | 6.25%, 07/15/2019 — 01/15/2040 ■ | 1,705 | ||||||
Tyco International Ltd. | ||||||||
837 | 8.50%, 01/15/2019 | 1,021 | ||||||
2,726 | ||||||||
Nonmetallic Mineral Product Manufacturing — 0.1% | ||||||||
Holcim Ltd. | ||||||||
257 | 6.00%, 12/30/2019 ■ | 265 | ||||||
Petroleum and Coal Products Manufacturing — 3.8% | ||||||||
Anadarko Petroleum Corp. | ||||||||
820 | 6.45%, 09/15/2036 | 853 | ||||||
Cenovus Energy, Inc. | ||||||||
1,005 | 6.75%, 11/15/2039 ■ | 1,098 | ||||||
ConocoPhillips | ||||||||
946 | 6.50%, 02/01/2039 | 1,059 | ||||||
Consumers Energy Co. | ||||||||
820 | 6.70%, 09/15/2019 | 942 | ||||||
Diamond Offshore Drilling, Inc. | ||||||||
582 | 5.70%, 10/15/2039 | 568 | ||||||
EnCana Corp. | ||||||||
136 | 6.50%, 05/15/2019 | 151 | ||||||
Gazprom International S.A. | ||||||||
390 | 7.20%, 02/01/2020 § | 401 | ||||||
Husky Energy, Inc. | ||||||||
396 | 7.25%, 12/15/2019 | 458 | ||||||
Kazmunaigaz Finance Sub B.V. | ||||||||
1,650 | 11.75%, 01/23/2015 ■ | 1,972 | ||||||
Nabors Industries, Inc. | ||||||||
634 | 9.25%, 01/15/2019 | 766 | ||||||
Petrobras International Finance Co. | ||||||||
1,385 | 6.88%, 01/20/2040 | 1,384 | ||||||
Sempra Energy | ||||||||
700 | 6.50%, 06/01/2016 | 769 | ||||||
523 | 9.80%, 02/15/2019 | 667 | ||||||
TNK-BP Finance S.A. | ||||||||
300 | 7.50%, 07/18/2016 ■ | 302 | ||||||
Valero Energy Corp. | ||||||||
1,320 | 6.63%, 06/15/2037 | 1,212 | ||||||
441 | 9.38%, 03/15/2019 | 522 | ||||||
13,124 | ||||||||
Pipeline Transportation — 0.7% | ||||||||
Kinder Morgan Energy Partners L.P. | ||||||||
550 | 5.63%, 02/15/2015 | 590 | ||||||
730 | 6.95%, 01/15/2038 | 782 | ||||||
TransCanada Pipelines Ltd. | ||||||||
814 | 7.25%, 08/15/2038 | 989 | ||||||
2,361 | ||||||||
Primary Metal Manufacturing — 1.2% | ||||||||
Alcan, Inc. | ||||||||
255 | 6.13%, 12/15/2033 | 258 | ||||||
ArcelorMittal | ||||||||
2,500 | 7.00%, 10/15/2039 | 2,364 | ||||||
1,415 | 9.00%, 02/15/2015 | 1,633 | ||||||
4,255 | ||||||||
Public Administration — 0.5% | ||||||||
Waste Management, Inc. | ||||||||
1,460 | 7.38%, 03/11/2019 | 1,702 | ||||||
Rail Transportation — 0.1% | ||||||||
Canadian Pacific Railway Co. | ||||||||
253 | 7.25%, 05/15/2019 | 292 | ||||||
Real Estate and Rental and Leasing — 0.7% | ||||||||
American Real Estate Partners L.P. | ||||||||
445 | 7.13%, 02/15/2013 | 437 | ||||||
COX Communications, Inc. | ||||||||
371 | 6.25%, 06/01/2018 ■ | 391 | ||||||
325 | 8.38%, 03/01/2039 ■ | 390 | ||||||
ERAC USA Finance Co. | ||||||||
1,176 | 5.60%, 05/01/2015 ■ | 1,187 | ||||||
2,405 | ||||||||
Retail Trade — 0.2% | ||||||||
Ahold Lease USA, Inc. | ||||||||
773 | 8.62%, 01/02/2025 | 777 | ||||||
Utilities — 1.7% | ||||||||
Commonwealth Edison Co. | ||||||||
1,700 | 5.80%, 03/15/2018 | 1,835 | ||||||
Duke Energy Corp. | ||||||||
355 | 6.35%, 08/15/2038 | 408 | ||||||
222 | 7.00%, 11/15/2018 | 264 | ||||||
Electricite de France | ||||||||
605 | 6.95%, 01/26/2039 ■ | 733 | ||||||
Enel Finance International S.A. | ||||||||
1,354 | 6.00%, 10/07/2039 ■ | 1,385 | ||||||
Exelon Generation Co. LLC | ||||||||
535 | 6.25%, 10/01/2039 | 558 |
7
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 33.4% — (continued) | ||||||||
Utilities — 1.7% — (continued) | ||||||||
Pacific Gas & Electric Energy Recovery Funding LLC | ||||||||
$ | 629 | 8.25%, 10/15/2018 | $ | 791 | ||||
5,974 | ||||||||
Total corporate bonds: investment grade (cost $103,335) | $ | 114,181 | ||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 36.6% | ||||||||
Accommodation and Food Services — 1.2% | ||||||||
Ameristar Casinos, Inc. | ||||||||
$ | 220 | 9.25%, 06/01/2014 ■ | $ | 229 | ||||
Harrah’s Operating Co., Inc. | ||||||||
1,235 | 11.25%, 06/01/2017 ■ | 1,259 | ||||||
MGM Mirage, Inc. | ||||||||
135 | 10.38%, 05/15/2014 ■ | 144 | ||||||
2,410 | 11.13%, 11/15/2017 ■ | 2,651 | ||||||
4,283 | ||||||||
Administrative Waste Management and Remediation — 0.5% | ||||||||
Iron Mountain, Inc. | ||||||||
685 | 8.00%, 06/15/2020 | 697 | ||||||
West Corp. | ||||||||
1,130 | 9.50%, 10/15/2014 | 1,130 | ||||||
1,827 | ||||||||
Agriculture, Forestry, Fishing and Hunting — 0.9% | ||||||||
SPX Corp. | ||||||||
1,150 | 7.63%, 12/15/2014 | 1,185 | ||||||
Tyson Foods, Inc. | ||||||||
1,660 | 10.50%, 03/01/2014 | 1,892 | ||||||
3,077 | ||||||||
Air Transportation — 0.1% | ||||||||
Bristow Group, Inc. | ||||||||
70 | 7.50%, 09/15/2017 | 67 | ||||||
Continental Airlines, Inc. | ||||||||
387 | 7.03%, 06/15/2011 | 349 | ||||||
416 | ||||||||
Arts, Entertainment and Recreation — 3.2% | ||||||||
AMC Entertainment, Inc. | ||||||||
725 | 11.00%, 02/01/2016 | 761 | ||||||
Cenveo, Inc. | ||||||||
300 | 10.50%, 08/15/2016 ■ | 295 | ||||||
Echostar DBS Corp. | ||||||||
2,260 | 7.75%, 05/31/2015 | 2,311 | ||||||
FireKeepers Development Authority | ||||||||
1,000 | 13.88%, 05/01/2015 ■ | 1,080 | ||||||
First Data Corp. | ||||||||
2,100 | 9.88%, 09/24/2015 | 1,937 | ||||||
Marquee Holdings, Inc. | ||||||||
575 | 9.51%, 08/15/2014 | 478 | ||||||
Pinnacle Entertainment, Inc. | ||||||||
205 | 8.63%, 08/01/2017 ■ | 204 | ||||||
TL Acquisitions, Inc. | ||||||||
2,495 | 10.50%, 01/15/2015 ■ | 2,358 | ||||||
Virgin Media Finance plc | ||||||||
920 | 9.50%, 08/15/2016 | 973 | ||||||
Virgin Media, Inc. | ||||||||
390 | 6.50%, 11/15/2016 ۞■ | 412 | ||||||
10,809 | ||||||||
Beverage and Tobacco Product Manufacturing — 0.3% | ||||||||
Constellation Brands, Inc. | ||||||||
995 | 8.38%, 12/15/2014 | 1,050 | ||||||
Chemical Manufacturing — 0.2% | ||||||||
Ashland, Inc. | ||||||||
690 | 9.13%, 06/01/2017 ■ | 745 | ||||||
Computer and Electronic Product Manufacturing — 0.2% | ||||||||
Seagate Technology International | ||||||||
605 | 10.00%, 05/01/2014 ■ | 672 | ||||||
Construction — 0.7% | ||||||||
D.R. Horton, Inc. | ||||||||
945 | 4.88%, 01/15/2010 | 945 | ||||||
Desarrolladora Homes S.A. | ||||||||
521 | 7.50%, 09/28/2015 | 506 | ||||||
KB Home & Broad Home Corp. | ||||||||
450 | 6.38%, 08/15/2011 | 451 | ||||||
Odebrecht Finance Ltd. | ||||||||
504 | 7.00%, 04/21/2020 ■ | 476 | ||||||
2,378 | ||||||||
Finance and Insurance — 1.5% | ||||||||
Ford Motor Credit Co. | ||||||||
750 | 5.70%, 01/15/2010 | 750 | ||||||
1,535 | 7.50%, 08/01/2012 | 1,495 | ||||||
540 | 12.00%, 05/15/2015 | 608 | ||||||
GMAC LLC | ||||||||
925 | 7.00%, 02/01/2012 ■ | 883 | ||||||
LPL Holdings, Inc. | ||||||||
1,255 | 10.75%, 12/15/2015 ■ | 1,271 | ||||||
5,007 | ||||||||
Food Manufacturing — 0.3% | ||||||||
Smithfield Foods, Inc. | ||||||||
940 | 10.00%, 07/15/2014 ■ | 987 | ||||||
Food Services — 0.3% | ||||||||
Aramark Corp. | ||||||||
940 | 5.00%, 06/01/2012 | 884 | ||||||
Foreign Governments — 3.3% | ||||||||
Argentina (Republic of) | ||||||||
2,370 | 7.00%, 10/03/2015 | 1,767 | ||||||
Indonesia (Republic of) | ||||||||
380 | 6.88%, 01/17/2018 § | 404 | ||||||
1,400 | 7.25%, 04/20/2015 § | 1,497 | ||||||
Panama (Republic of) | ||||||||
1,890 | 7.13%, 01/29/2026 | 2,079 | ||||||
Philippines (Republic of) | ||||||||
285 | 6.38%, 10/23/2034 | 279 | ||||||
1,400 | 6.50%, 01/20/2020 | 1,486 | ||||||
225 | 8.38%, 06/17/2019 | 272 | ||||||
Turkey (Republic of) | ||||||||
1,656 | 7.25%, 03/15/2015 | 1,846 | ||||||
Venezuela (Republic of) | ||||||||
2,244 | 5.75%, 02/26/2016 § | 1,509 | ||||||
11,139 | ||||||||
Health Care and Social Assistance — 3.2% | ||||||||
Biomet, Inc. | ||||||||
1,420 | 10.38%, 10/15/2017 | 1,528 |
8
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 36.6% — (continued) | ||||||||
Health Care and Social Assistance — 3.2% — (continued) | ||||||||
DaVita, Inc. | ||||||||
$ | 1,175 | 6.63%, 03/15/2013 | $ | 1,157 | ||||
HCA, Inc. | ||||||||
640 | 7.88%, 02/01/2011 | 653 | ||||||
305 | 8.50%, 04/15/2019 ■ | 323 | ||||||
1,610 | 9.25%, 11/15/2016 | 1,682 | ||||||
IASIS Healthcare Capital Corp. | ||||||||
900 | 8.75%, 06/15/2014 | 923 | ||||||
Invacare Corp. | ||||||||
65 | 9.75%, 02/15/2015 | 69 | ||||||
Inverness Medical Innovation, Inc. | ||||||||
680 | 9.00%, 05/15/2016 | 690 | ||||||
Multiplan Corp. | ||||||||
375 | 10.38%, 04/15/2016 ■ | 360 | ||||||
Psychiatric Solutions, Inc. | ||||||||
1,550 | 7.75%, 07/15/2015 | 1,527 | ||||||
Reable Therapeutics Finance LLC | ||||||||
550 | 11.75%, 11/15/2014 | 550 | ||||||
Skilled Healthcare Group, Inc. | ||||||||
600 | 11.00%, 01/15/2014 | 624 | ||||||
Warner Chilcott Corp. | ||||||||
1,000 | 8.75%, 02/01/2015 | 1,035 | ||||||
11,121 | ||||||||
Information — 5.3% | ||||||||
Canwest MediaWorks L.P. | ||||||||
535 | 0.00%, 08/01/2015 ■ • | 107 | ||||||
Charter Communications Operating LLC | ||||||||
925 | 12.88%, 09/15/2014 ■ Ψ | 1,022 | ||||||
CSC Holdings, Inc. | ||||||||
820 | 8.50%, 04/15/2014 ■ | 866 | ||||||
Frontier Communications Corp. | ||||||||
2,360 | 8.25%, 05/01/2014 | 2,419 | ||||||
Intelsat Corp. | ||||||||
1,020 | 9.25%, 06/15/2016 | 1,038 | ||||||
Intelsat Jackson Holdings Ltd. | ||||||||
370 | 11.50%, 06/15/2016 | 388 | ||||||
Level 3 Financing, Inc. | ||||||||
1,550 | 12.25%, 03/15/2013 | 1,616 | ||||||
MetroPCS Wireless, Inc. | ||||||||
1,940 | 9.25%, 11/01/2014 | 1,955 | ||||||
Qwest Communications International, Inc. | ||||||||
1,500 | 7.50%, 02/15/2014 | 1,470 | ||||||
Sprint Capital Corp. | ||||||||
1,400 | 7.63%, 01/30/2011 | 1,416 | ||||||
1,010 | 8.75%, 03/15/2032 | 873 | ||||||
Videotron Ltee | ||||||||
625 | 6.88%, 01/15/2014 | 625 | ||||||
1,070 | 9.13%, 04/15/2018 | 1,158 | ||||||
Wind Acquisition Finance S.A. | ||||||||
1,300 | 11.75%, 07/15/2017 ■ | 1,469 | ||||||
Windstream Corp. | ||||||||
1,520 | 8.63%, 08/01/2016 | 1,562 | ||||||
17,984 | ||||||||
Machinery Manufacturing — 0.1% | ||||||||
Bausch & Lomb, Inc. | ||||||||
460 | 9.88%, 11/01/2015 | 476 | ||||||
Mining — 1.9% | ||||||||
Drummond Co., Inc. | ||||||||
1,410 | 7.38%, 02/15/2016 ■ | 1,290 | ||||||
Peabody Energy Corp. | ||||||||
450 | 6.88%, 03/15/2013 | 455 | ||||||
1,000 | 7.38%, 11/01/2016 | 1,010 | ||||||
Teck Resources Ltd. | ||||||||
1,900 | 10.75%, 05/15/2019 | 2,213 | ||||||
Vedanta Resources plc | ||||||||
1,650 | 9.50%, 07/18/2018 ■ | 1,646 | ||||||
6,614 | ||||||||
Miscellaneous Manufacturing — 0.3% | ||||||||
Graham Packaging Co., Inc. | ||||||||
500 | 8.50%, 10/15/2012 | 504 | ||||||
L-3 Communications Corp. | ||||||||
410 | 5.88%, 01/15/2015 | 399 | ||||||
903 | ||||||||
Motor Vehicle & Parts Manufacturing — 0.5% | ||||||||
ESCO Corp. | ||||||||
1,600 | 8.63%, 12/15/2013 ■ | 1,580 | ||||||
Paper Manufacturing — 0.9% | ||||||||
Appleton Papers, Inc. | ||||||||
404 | 11.25%, 12/15/2015 ■ | 340 | ||||||
Georgia-Pacific LLC | ||||||||
2,150 | 8.25%, 05/01/2016 ■ | 2,279 | ||||||
420 | 9.50%, 12/01/2011 | 454 | ||||||
3,073 | ||||||||
Petroleum and Coal Products Manufacturing — 3.3% | ||||||||
Chesapeake Energy Corp. | ||||||||
470 | 7.00%, 08/15/2014 | 474 | ||||||
775 | 7.63%, 07/15/2013 | 798 | ||||||
235 | 9.50%, 02/15/2015 | 254 | ||||||
Ferrellgas Partners L.P. | ||||||||
400 | 6.75%, 05/01/2014 | 382 | ||||||
1,275 | 8.75%, 06/15/2012 | 1,275 | ||||||
Headwaters, Inc. | ||||||||
340 | 11.38%, 11/01/2014 ■ | 341 | ||||||
Inergy L.P. | ||||||||
1,000 | 8.25%, 03/01/2016 | 1,015 | ||||||
Newfield Exploration Co. | ||||||||
1,250 | 7.13%, 05/15/2018 | 1,255 | ||||||
Petrohawk Energy Corp. | ||||||||
1,500 | 9.13%, 07/15/2013 | 1,553 | ||||||
Plains Exploration & Production Co. | ||||||||
450 | 7.63%, 06/01/2018 | 437 | ||||||
1,100 | 7.75%, 06/15/2015 | 1,086 | ||||||
300 | 10.00%, 03/01/2016 | 321 | ||||||
Tesoro Corp. | ||||||||
1,000 | 9.75%, 06/01/2019 | 1,027 | ||||||
Western Refining, Inc. | ||||||||
1,000 | 10.75%, 06/15/2014 ■ Δ | 925 | ||||||
11,143 | ||||||||
Pipeline Transportation — 1.5% | ||||||||
Copano Energy LLC | ||||||||
600 | 8.13%, 03/01/2016 | 587 | ||||||
Dynegy Holdings, Inc. | ||||||||
1,600 | 7.75%, 06/01/2019 | 1,348 |
9
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 36.6% — (continued) | ||||||||
Pipeline Transportation — 1.5% — (continued) | ||||||||
El Paso Corp. | ||||||||
$ | 1,800 | 7.00%, 06/15/2017 | $ | 1,801 | ||||
500 | 7.75%, 01/15/2032 | 468 | ||||||
Kinder Morgan, Inc. | ||||||||
550 | 5.15%, 03/01/2015 | 522 | ||||||
540 | 6.50%, 09/01/2012 | 555 | ||||||
5,281 | ||||||||
Plastics and Rubber Products Manufacturing — 0.2% | ||||||||
Goodyear Tire & Rubber Co. | ||||||||
750 | 5.01%, 12/01/2009Δ | 750 | ||||||
Printing and Related Support Activities — 0.1% | ||||||||
Harland Clarke Holdings | ||||||||
455 | 9.50%, 05/15/2015 | 415 | ||||||
Professional, Scientific and Technical Services — 1.0% | ||||||||
Affinion Group, Inc. | ||||||||
1,855 | 11.50%, 10/15/2015 | 1,938 | ||||||
Affinon Group, Inc. | ||||||||
510 | 10.13%, 10/15/2013 | 523 | ||||||
SunGard Data Systems, Inc. | ||||||||
900 | 10.25%, 08/15/2015 | 928 | ||||||
3,389 | ||||||||
Retail Trade — 2.7% | ||||||||
Dollar General Corp. | ||||||||
1,680 | 10.63%, 07/15/2015 | 1,840 | ||||||
Dollarama Group L.P. | ||||||||
700 | 8.88%, 08/15/2012 | 731 | ||||||
Federated Retail Holdings, Inc. | ||||||||
2,770 | 5.90%, 12/01/2016 | 2,555 | ||||||
Parkson Retail Group Ltd. | ||||||||
1,050 | 7.88%, 11/14/2011 | 1,085 | ||||||
Supervalu, Inc. | ||||||||
1,280 | 8.00%, 05/01/2016 | 1,302 | ||||||
United Components, Inc. | �� | |||||||
1,275 | 9.38%, 06/15/2013 | 1,208 | ||||||
Yankee Acquisition Corp. | ||||||||
725 | 8.50%, 02/15/2015 | 693 | ||||||
9,414 | ||||||||
Transit and Ground Passenger Transportation — 0.1% | ||||||||
Grupo Senda Autotransporte | ||||||||
290 | 10.50%, 10/03/2015 ■ | 236 | ||||||
Utilities — 2.4% | ||||||||
AES Corp. | ||||||||
2,365 | 8.00%, 10/15/2017 | 2,377 | ||||||
AES El Salvador Trust | ||||||||
700 | 6.75%, 02/01/2016 § | 601 | ||||||
Energy Future Holdings Corp. | ||||||||
2,490 | 10.88%, 11/01/2017 | 1,730 | ||||||
Mirant Mid-Atlantic LLC | ||||||||
626 | 9.13%, 06/30/2017 | 632 | ||||||
Mirant North America LLC | ||||||||
680 | 7.38%, 12/31/2013 | 670 | ||||||
NRG Energy, Inc. | ||||||||
1,365 | 7.25%, 02/01/2014 | 1,355 | ||||||
795 | 8.50%, 06/15/2019 | 805 | ||||||
Texas Competitive Electric Co. | ||||||||
315 | 10.25%, 11/01/2015 | 224 | ||||||
8,394 | ||||||||
Wholesale Trade — 0.4% | ||||||||
SGS International, Inc. | ||||||||
450 | 12.00%, 12/15/2013 | 427 | ||||||
Supervalu, Inc. | ||||||||
900 | 7.50%, 11/15/2014 | 898 | ||||||
1,325 | ||||||||
Total corporate bonds: non-investment grade (cost $117,553) | $ | 125,372 | ||||||
MUNICIPAL BONDS — 0.5% | ||||||||
Transportation — 0.5% | ||||||||
Bay Area Toll Auth | ||||||||
$ | 910 | 6.26%, 04/01/2049 ☼ | $ | 919 | ||||
North Texas Tollway Auth Rev | ||||||||
739 | 6.72%, 01/01/2049 | 805 | ||||||
1,724 | ||||||||
Total municipal bonds (cost $1,666) | $ | 1,724 | ||||||
SENIOR FLOATING RATE INTERESTS: INVESTMENT GRADE ♦ — 0.1% | ||||||||
Motor Vehicle & Parts Manufacturing — 0.1% | ||||||||
Lear Corp. | ||||||||
$ | 400 | 0.00%, 08/10/2010 ±Ω | $ | 400 | ||||
Total senior floating rate interests: investment grade (cost $400) | $ | 400 | ||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦ — 10.2% | ||||||||
Administrative Waste Management and Remediation — 0.3% | ||||||||
Affinion Group, Inc. | ||||||||
$ | 1,048 | 9.19%, 05/17/2012 ± | $ | 943 | ||||
Agriculture, Construction, and Mining Machinery — 0.2% | ||||||||
Goodyear Engineered Products, Delayed Draw Term Loan | ||||||||
50 | 2.50%, 07/31/2014 ± | 40 | ||||||
Goodyear Engineered Products, First Lien | ||||||||
845 | 2.50%, 07/31/2014 ± | 678 | ||||||
718 | ||||||||
Arts, Entertainment and Recreation — 1.1% | ||||||||
Dex Media West LLC, Inc. | ||||||||
989 | 7.00%, 10/24/2014 ±¤ Ψ | 870 | ||||||
Golden Nugget, Inc. | ||||||||
250 | 3.50%, 12/31/2014 ±⌂ | 100 | ||||||
Greenwood Racing, Inc. | ||||||||
1,448 | 2.50%, 11/14/2011 ± | 1,411 | ||||||
Pittsburgh Casino | ||||||||
1,000 | 9.25%, 01/24/2013 ± | 919 | ||||||
Universal City Development Partners Ltd. | ||||||||
313 | 6.00%, 11/15/2014 ±☼ | 312 | ||||||
3,612 | ||||||||
10
Shares or Principal Amount | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦— 10.2% — (continued) | ||||||||
Chemical Manufacturing — 1.4% | ||||||||
Arizona Chemical Co. | ||||||||
$ | 250 | 5.76%, 02/27/2014 ± | $ | 214 | ||||
Ashland, Inc. | ||||||||
325 | 6.65%, 05/13/2014 ± | 330 | ||||||
Ineos Group | ||||||||
1,000 | 7.50%, 12/16/2013 ±¤ | 851 | ||||||
1,000 | 8.00%, 12/16/2014 ±¤ | 855 | ||||||
Lyondell Chemical Co. | ||||||||
334 | 5.80%, 02/03/2010 ± Ψ | 315 | ||||||
1,741 | 9.17%, 02/03/2010 ±¤ Ψ | 1,792 | ||||||
Lyondell Chemical Co., Dutch RC | ||||||||
15 | 3.74%, 12/20/2013 ± Ψ | 9 | ||||||
Lyondell Chemical Co., Dutch Tranche A | ||||||||
34 | 3.74%, 12/20/2013 ± Ψ | 20 | ||||||
Lyondell Chemical Co., German B-1 | ||||||||
43 | 3.99%, 12/20/2014 ± Ψ | 25 | ||||||
Lyondell Chemical Co., German B-2 | ||||||||
43 | 3.99%, 12/20/2014 ± Ψ | 24 | ||||||
Lyondell Chemical Co., German B-3 | ||||||||
43 | 3.99%, 12/20/2014 ± Ψ | 24 | ||||||
Lyondell Chemical Co., Primary RC | ||||||||
56 | 3.74%, 12/20/2013 ± Ψ | 32 | ||||||
Lyondell Chemical Co., Term Loan A | ||||||||
107 | 3.74%, 12/20/2013 ± Ψ | 61 | ||||||
Lyondell Chemical Co., U.S. B-1 | ||||||||
187 | 7.00%, 12/20/2014 ± Ψ | 106 | ||||||
Lyondell Chemical Co., U.S. B-2 | ||||||||
187 | 7.00%, 12/20/2014 ± Ψ | 106 | ||||||
Lyondell Chemical Co., U.S. B-3 | ||||||||
187 | 7.00%, 12/20/2014 ± Ψ | 106 | ||||||
4,870 | ||||||||
Construction — 0.2% | ||||||||
Custom Building Products | ||||||||
811 | 9.00%, 10/20/2011 ± | 795 | ||||||
Finance and Insurance — 0.5% | ||||||||
BNY Convergex Group LLC & EZE Castle Software | ||||||||
1,500 | 3.25%, 08/30/2013 ± | 1,442 | ||||||
MacAndrews Amg Holdings LLC | ||||||||
350 | 6.03%, 04/17/2012 ± ⌂ | 311 | ||||||
1,753 | ||||||||
Food Manufacturing — 0.3% | ||||||||
Dole Food Co., Inc. | ||||||||
98 | 0.28%, 04/12/2013 ± | 99 | ||||||
172 | 7.97%, 04/12/2013 ± | 173 | ||||||
617 | 8.00%, 04/12/2013 ± | 622 | ||||||
894 | ||||||||
Health Care and Social Assistance — 0.4% | ||||||||
Generics International, Inc. | ||||||||
983 | 3.78%, 11/19/2014 ±⌂ | 894 | ||||||
Inverness Medical Innovation, Inc. | ||||||||
438 | 4.50%, 06/26/2015 ± | 423 | ||||||
1,317 | ||||||||
Information — 1.5% | ||||||||
Charter Communications Operating LLC | ||||||||
1,990 | 9.25%, 03/06/2014 ±Ψ | 2,006 | ||||||
Emdeon Business Services LLC | ||||||||
500 | 5.29%, 05/16/2014 ± | 482 | ||||||
Infor Global Solutions, Delayed Draw Term Loan | ||||||||
256 | 4.00%, 07/28/2012 ± | 225 | ||||||
Infor Global Solutions, U.S. Term Loan | ||||||||
490 | 4.00%, 07/28/2012 ± | 432 | ||||||
One Communications Corp. | ||||||||
442 | 4.58%, 06/30/2012 ± | 402 | ||||||
Telesat Canada, Delayed Draw Term Loan | ||||||||
39 | 3.25%, 09/01/2014 ± | 37 | ||||||
Telesat Canada, Term Loan B | ||||||||
453 | 3.25%, 09/01/2014 ± | 434 | ||||||
West Corp. | ||||||||
997 | 7.25%, 10/24/2013 ± | 998 | ||||||
WideOpenWest Finance LLC | ||||||||
284 | 7.30%, 06/29/2015 ± | 217 | ||||||
5,233 | ||||||||
Miscellaneous Manufacturing — 0.1% | ||||||||
WESCO Aircraft Hardware Corp. | ||||||||
500 | 6.00%, 03/28/2014 ± | 417 | ||||||
Motor Vehicle & Parts Manufacturing — 0.8% | ||||||||
Accuride Corp. | ||||||||
1,500 | 8.00%, 01/31/2012 ±¤ Ψ | 1,486 | ||||||
Lear Corp. | ||||||||
994 | 0.00%, 04/25/2012 ◊ Ω | 955 | ||||||
Lear Corp., Extended Delayed Draw Term Loan B | ||||||||
96 | 5.50%, 10/21/2014 ◊ ¤ Ψ | 96 | ||||||
Lear Corp., Extended Term Loan B | ||||||||
96 | 5.50%, 10/21/2014 ◊ ¤ Ψ | 97 | ||||||
2,634 | ||||||||
Petroleum and Coal Products Manufacturing — 1.1% | ||||||||
Atlas Pipeline Partners L.P. | ||||||||
941 | 6.75%, 07/27/2014 ± | 915 | ||||||
Calumet Lubricants Co., L.P. | ||||||||
115 | 0.13%, 12/29/2014 ± | 102 | ||||||
856 | 4.31%, 01/03/2015 ± | 760 | ||||||
Coffeyville Resources | ||||||||
1,055 | 8.50%, 12/21/2013 ± | 1,052 | ||||||
Turbo Beta Ltd. | ||||||||
1,023 | 14.50%, 03/12/2018 ± ⌂ † | 716 | ||||||
Western Refining, Inc. | ||||||||
270 | 8.25%, 05/30/2014 ± | 262 | ||||||
3,807 | ||||||||
Primary Metal Manufacturing — 0.1% | ||||||||
John Maneely Co. | ||||||||
442 | 3.51%, 12/08/2013 ± | 403 | ||||||
Professional, Scientific and Technical Services — 0.3% | ||||||||
Brand Energy & Infrastructure Services | ||||||||
490 | 3.66%, 02/07/2014 ± | 453 | ||||||
Tensar Corp. | ||||||||
476 | 3.78%, 10/28/2012 ± | 371 | ||||||
824 | ||||||||
Real Estate and Rental and Leasing — 0.1% | ||||||||
Realogy Corp. | ||||||||
104 | 3.16%, 10/05/2013 ± | 86 | ||||||
385 | 3.29%, 10/05/2014 ± | 320 | ||||||
406 | ||||||||
11
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦— 10.2% — (continued) | ||||||||
Retail Trade — 0.8% | ||||||||
Rite Aid Corp. | ||||||||
$ | 2,700 | 9.50%, 06/10/2015 ±☼ | $ | 2,766 | ||||
Soap, Cleaning Compound and Toilet Manufacturing - 0.3% | ||||||||
Philosophy, Inc. | ||||||||
239 | 2.25%, 03/17/2014 ± | 195 | ||||||
Yankee Candle Co. | ||||||||
947 | 2.25%, 02/06/2014 ± | 881 | ||||||
1,076 | ||||||||
Utilities — 0.7% | ||||||||
Astoria Generating Co. Acquisitions LLC | ||||||||
500 | 4.04%, 08/23/2013 ± | 460 | ||||||
BRSP LLC | ||||||||
1,000 | 7.50%, 06/24/2014 ± | 938 | ||||||
Texas Competitive Electric Holdings Co. LLC | ||||||||
490 | 3.74%, 10/10/2014 ± | 379 | ||||||
Texas Competitive Electric Holdings Co. LLC, Term Loan B-3 | ||||||||
490 | 3.74%, 10/12/2014 ± | 376 | ||||||
TPF Generation Holdings LLC | ||||||||
375 | 4.50%, 12/21/2014 ± | 319 | ||||||
2,472 | ||||||||
Total senior floating rate interests: non-investment grade (cost $35,878) | $ | 34,940 | ||||||
U.S. GOVERNMENT AGENCIES — 1.7% | ||||||||
Other Government Agencies — 1.7% | ||||||||
Small Business Administration | ||||||||
Participation Certificates: | ||||||||
2,668 | 5.16%, 02/01/2028 | 2,836 | ||||||
2,674 | 5.31%, 05/01/2027 | 2,889 | ||||||
5,725 | ||||||||
Total U.S. government agencies (cost $5,376) | $ | 5,725 | ||||||
U.S. GOVERNMENT SECURITIES — 6.6% | ||||||||
U.S. Treasury Securities — 6.6% | ||||||||
U.S. Treasury Notes — 6.6% | ||||||||
$ | 20,895 | 1.00%, 09/30/2011 ‡ | $ | 20,954 | ||||
1,710 | 4.50%, 08/15/2039 | 1,786 | ||||||
22,740 | ||||||||
Total U.S. government securities (cost $22,694) | $ | 22,740 | ||||||
Contracts | Market Value ╪ | |||||||
PUT OPTIONS PURCHASED — 0.0% | ||||||||
Long Put Future Option Contract — 0.0% | ||||||||
10 Year U.S. Treasury | ||||||||
— | Expiration: February, 2010, Exercise Price: | |||||||
$110.00 | $ | 46 | ||||||
Total put options purchased (cost $56) | $ | 46 | ||||||
Total long-term investments (cost $312,074) | $ | 331,516 | ||||||
Shares or Principal Amount | |||||||||||||
SHORT-TERM INVESTMENTS — 3.4% | |||||||||||||
Investment Pools and Funds — 3.0% | |||||||||||||
10,134 | JP Morgan U.S. Government Money Market Fund | $ | 10,134 | ||||||||||
— | State Street Bank U.S. Government Money Market Fund | — | |||||||||||
— | Wells Fargo Advantage Government Money Market Fund | — | |||||||||||
10,134 | |||||||||||||
Repurchase Agreements — 0.3% | |||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 11/02/2009 in the amount of $531, collateralized by U.S. Treasury Bond 5.25% — 7.88%, 2021 - 2029, value of $550) | |||||||||||||
$ | 531 | 0.06%, 10/30/2009 | 531 | ||||||||||
RBS Greenwich Capital Markets TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $267, collateralized by U.S. Treasury Bond 5.00%, 2037, U.S. Treasury Note 3.13% - 4.63%, 2013 — 2017, value of $273) | |||||||||||||
267 | 0.06%, 10/30/2009 | 267 | |||||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 11/02/2009 in the amount of $245, collateralized by U.S. Treasury Note 1.50%, 2010, value of $248) | |||||||||||||
245 | 0.04%, 10/30/2009 | 245 | |||||||||||
1,043 | |||||||||||||
U.S. Treasury Bills — 0.1% | |||||||||||||
325 | 0.07%, 1/14/2010oo | 325 | |||||||||||
Total short-term investments (cost $11,502) | $ | 11,502 | |||||||||||
Total investments (cost $323,576) ▲ | 100.2 | % | $ | 343,018 | |||||||||
Other assets and liabilities | (0.2 | )% | (670 | ) | |||||||||
Total net assets | 100.0 | % | $ | 342,348 | |||||||||
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 18.3% of total net assets at October 31, 2009. |
12
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $323,857 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 23,823 | ||
Unrealized Depreciation | (4,662 | ) | ||
Net Unrealized Appreciation | $ | 19,161 | ||
† | 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 October 31, 2009, was $716, 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 October 31, 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 October 31, 2009, was $58,063, which represents 16.96% 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 determined to be liquid. At October 31, 2009, the market value of these securities amounted to $6,585 or 1.92% 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 October 31, 2009. | |
o | 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 October 31, 2009 was $6,753. | |
± | The interest rate disclosed for these securities represents the average coupon as of October 31, 2009. | |
◊ | The interest rate disclosed for these securities represents an estimated average coupon as of October 31, 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. | |
♦ | Senior loans 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. | |
□ | Security pledged as initial margin deposit for open futures contracts at October 31, 2009. |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
2 Year U.S. Treasury | ||||||||||||||||
Note | 35 | Long | Dec 2009 | $ | 28 | |||||||||||
5 Year U.S. Treasury | ||||||||||||||||
Note | 43 | Long | Dec 2009 | 8 | ||||||||||||
10 Year U.S. Treasury | ||||||||||||||||
Note | 1 | Short | Dec 2009 | — | ||||||||||||
U.S. Long Bond | 17 | Short | Dec 2009 | 39 | ||||||||||||
$ | 75 | |||||||||||||||
* | 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 | |||||||||
08/2007 | $ | 1,195 | Bayview Commercial Asset Trust, 7.50%, 09/25/2037 - 144A | $ | 163 | |||||||
05/2007 | $ | 4,373 | CBA Commercial Small Balance Commercial Mortgage, 7.25%, 07/25/2039 - 144A | 362 | ||||||||
11/2007 | $ | 983 | Generics International, Inc., 3.78%, 11/19/2014 | 972 | ||||||||
06/2007 | $ | 250 | Golden Nugget, Inc., 3.50%, 12/31/2014 | 250 | ||||||||
05/2007 | $ | 622 | Greenwich Capital Commercial Funding Corp., 0.00%, 11/05/2021 - 144A | 604 | ||||||||
09/2007 | $ | 350 | MacAndrews Amg Holdings LLC, 6.03%, 04/17/2012 | 344 | ||||||||
06/2008 - 05/2009 | $ | 1,023 | Turbo Beta Ltd., 14.50%, 03/12/2018 | 1,023 | ||||||||
03/2008 | $ | 570 | Wells Fargo Alternative Loan Trust, 6.25%, 11/25/2037 | 460 |
The aggregate value of these securities at October 31, 2009 was $2,910 which represents 0.85% of total net assets. | ||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
13
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Asset & Commercial Mortgage Backed Securities | $ | 26,388 | $ | — | $ | 25,192 | $ | 1,196 | ||||||||
Corporate Bonds: Investment Grade | 114,181 | — | 113,327 | 854 | ||||||||||||
Corporate Bonds: Non-Investment Grade | 125,372 | — | 122,624 | 2,748 | ||||||||||||
Municipal Bonds | 1,724 | — | 1,724 | — | ||||||||||||
Put Options Purchased | 46 | 46 | — | — | ||||||||||||
Senior Floating Rate Interests: Investment Grade | 400 | — | 400 | — | ||||||||||||
Senior Floating Rate Interests: Non-Investment Grade | 34,940 | — | 33,813 | 1,127 | ||||||||||||
U.S. Government Agencies | 5,725 | — | 5,725 | — | ||||||||||||
U.S. Government Securities | 22,740 | 22,740 | — | — | ||||||||||||
Short-Term Investments | 11,502 | 10,134 | 1,368 | — | ||||||||||||
Total | $ | 343,018 | $ | 32,920 | $ | 304,173 | $ | 5,925 | ||||||||
Other Financial Instruments * | $ | 75 | $ | 75 | $ | — | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | — | $ | — | $ | — | $ | — | ||||||||
* | 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. |
Change in | ||||||||||||||||||||||||
Balance as of | Unrealized | Transfers In | Balance as of | |||||||||||||||||||||
October 31, | Realized Gain | Appreciation | and/or Out of | October 31, | ||||||||||||||||||||
2008 | (Loss) | (Depreciation) | Net Purchases | Level 3 | 2009 | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Asset & Commercial Mortgage Backed Securities | 2,105 | (169 | ) | (190 | )* | 32 | (582 | ) | 1,196 | |||||||||||||||
Corporate Bonds and Senior Floating Rate Interests | 2,287 | (1,473 | ) | 2,229 | † | 1,942 | (256 | ) | 4,729 | |||||||||||||||
Total | $ | 4,392 | $ | (1,642 | ) | $ | 2,039 | $ | 1,974 | $ | (838 | ) | $ | 5,925 | ||||||||||
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $(310). | |
† | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $1,258. |
14
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $323,576) | $ | 343,018 | ||
Foreign currency on deposit with custodian (cost $—) | — | |||
Receivables: | ||||
Investment securities sold | 1,138 | |||
Fund shares sold | 1,382 | |||
Dividends and interest | 5,669 | |||
Variation margin | 40 | |||
Other assets | 92 | |||
Total assets | 351,339 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 7,749 | |||
Fund shares redeemed | 609 | |||
Investment management fees | 31 | |||
Dividends | 449 | |||
Distribution fees | 28 | |||
Variation margin | 70 | |||
Accrued expenses | 53 | |||
Other liabilities | 2 | |||
Total liabilities | 8,991 | |||
Net assets | $ | 342,348 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 358,419 | |||
Accumulated undistributed net investment income | 206 | |||
Accumulated net realized loss on investments and foreign currency transactions | (35,794 | ) | ||
Unrealized appreciation of investments | 19,517 | |||
Net assets | $ | 342,348 | ||
Shares authorized | 750,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.69/$9.10 | ||
Shares outstanding | 16,894 | |||
Net assets | $ | 146,738 | ||
Class B: Net asset value per share | $ | 8.69 | ||
Shares outstanding | 1,657 | |||
Net assets | $ | 14,397 | ||
Class C: Net asset value per share | $ | 8.70 | ||
Shares outstanding | 13,852 | |||
Net assets | $ | 120,513 | ||
Class I: Net asset value per share | $ | 8.71 | ||
Shares outstanding. | 5,246 | |||
Net assets | $ | 45,664 | ||
Class Y: Net asset value per share | $ | 8.69 | ||
Shares outstanding | 1,731 | |||
Net assets | $ | 15,036 | ||
15
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Interest | $ | 20,684 | ||
Total investment income | 20,684 | |||
Expenses: | ||||
Investment management fees | 1,472 | |||
Transfer agent fees | 272 | |||
Distribution fees | ||||
Class A | 282 | |||
Class B | 101 | |||
Class C | 898 | |||
Custodian fees | 12 | |||
Accounting services fees | 48 | |||
Registration and filing fees | 92 | |||
Board of Directors’ fees | 8 | |||
Audit fees | 16 | |||
Other expenses | 66 | |||
Total expenses (before fees paid indirectly) | 3,267 | |||
Custodian fee offset | — | |||
Total fees paid indirectly | — | |||
Total expenses, net | 3,267 | |||
Net Investment Income | 17,417 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (26,888 | ) | ||
Net realized gain on futures | 2,849 | |||
Net realized loss on swap contracts | (39 | ) | ||
Net realized loss on forward foreign currency contracts | (7 | ) | ||
Net realized loss on other foreign currency transactions | (460 | ) | ||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (24,545 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 71,123 | |||
Net unrealized appreciation of futures | 627 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 57 | |||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions | 71,807 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 47,262 | |||
Net Increase in Net Assets Resulting from Operations | $ | 64,679 | ||
16
(000’s Omitted)
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 17,417 | $ | 14,226 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (24,545 | ) | (11,916 | ) | ||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 71,807 | (52,134 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 64,679 | (49,824 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (7,387 | ) | (5,814 | ) | ||||
Class B | (577 | ) | (337 | ) | ||||
Class C | (5,257 | ) | (3,800 | ) | ||||
Class I | (2,079 | ) | (1,913 | ) | ||||
Class Y | (1,757 | ) | (1,949 | ) | ||||
Total distributions | (17,057 | ) | (13,813 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 46,817 | 61,055 | ||||||
Class B | 6,212 | 5,497 | ||||||
Class C | 36,501 | 70,941 | ||||||
Class I | 15,731 | 21,383 | ||||||
Class Y | (25,207 | ) | 34,722 | |||||
Net increase from capital share transactions | 80,054 | 193,598 | ||||||
Net Increase In Net Assets | 127,676 | 129,961 | ||||||
Net Assets: | ||||||||
Beginning of period | 214,672 | 84,711 | ||||||
End of period | $ | 342,348 | $ | 214,672 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 206 | $ | 182 | ||||
17
October 31, 2009
(000’s Omitted)
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. |
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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. | ||
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 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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 |
18
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. 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 Valuation Time. 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 using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service may be 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 generally valued at amortized cost, which approximates market value. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s Valuation Time. | |||
Options contracts on securities, currencies, indices, futures contracts, commodities and other instruments shall be valued at their last reported sale 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 sale price at the Valuation Time on another exchange or market where it did trade. If it is not possible to determine the last reported sale price on the Primary Market or another 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. Absent both bid and asked prices on such exchange, the bid price may be used. | |||
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 and asked 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. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. | |||
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. |
19
October 31, 2009
(000’s Omitted)
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions — Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate 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. |
20
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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had no outstanding forward foreign currency contracts as of October 31, 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 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 |
21
October 31, 2009
(000’s Omitted)
value, due to the unavailability of reliable market quotations for such securities or investments, and an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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. The Fund, as shown on the Schedule of Investments, had when-issued or delayed delivery securities as of October 31, 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) | 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 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) | Credit Default Swaps — The Fund is subject to credit risk in the normal course of pursuing its investment objectives. The Fund may enter into event linked swaps, including credit default swap contracts. The credit default swap market allows the Fund to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults of corporate and sovereign issuers, or to create exposure to corporate or sovereign issuers to which it is not otherwise |
22
exposed. Certain credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying security in the event of a credit event, such as payment default or bankruptcy. | |||
Under a credit default swap, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying security at par if the defined credit event occurs. Upon the occurrence of a defined credit event, the difference between the value of the reference obligation and the swap’s notional amount is recorded as realized gain or loss on swap transactions in the Statement of Operations. 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. This risk is mitigated by having a master netting arrangement between the Fund and the counterparty (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities) or by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty. The Fund will generally not buy protection on issuers that are not currently held by the Fund. The Fund had no outstanding credit default swaps as of October 31, 2009. | |||
n) | Interest Rate Swaps — The Fund is subject to interest rate risk exposure in the normal course of pursuing its investment objectives. Because the Fund holds fixed rate bonds, the value of these bonds may decrease if interest rates rise. To help hedge against this risk and to maintain its ability to generate income at prevailing market rates, the Fund may enter into interest rate swap contracts. In a typical interest rate swap, one party agrees to make regular payments equal to a floating interest rate, based on a specified interest rate benchmark (i.e. LIBOR, etc.), 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. The net interest received or paid on interest rate swap agreements is accrued daily as interest income/expense. Interest rate swaps are marked-to-market daily and the change, if any, is recorded as an unrealized gain or loss in the Statement of Operations. When the interest rate swap contract is terminated early, the Fund records a realized gain or loss equal to the difference between the current realized value and the expected cash flows. | ||
If an interest rate swap agreement provides for payments in different currencies, the parties might agree to exchange the notional principal amount as well. Interest rate swaps may also depend on other prices or rates, such as the value of an index or mortgage prepayment rates. The risks of interest rate swaps include changes in market conditions which will affect the value of the contract or the cash flows and the possible inability of the counterparty to fulfill its obligations under the agreement. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the contract’s remaining life, to the extent that amount is positive. This risk may be mitigated by having a master netting arrangement between the Fund and the counterparty or by posting collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty. As of October 31, 2009, the Fund had no outstanding interest rate swaps. | |||
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) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||||||||
Interest rate contracts | Investments in securities, at value (Purchased Options), Market Value | $ | 46 | |||||||||||||
Interest rate contracts | Summary of Net Assets - Unrealized appreciation | 75 | Summary of Net Assets - Unrealized depreciation | — |
The ratio of futures market value to net assets as of October 31, 2009, was 4.14%, compared to a monthly twelve-month average ratio of 12.66%. The volume of other derivative activity was minimal during the year ended October 31, 2009. |
23
October 31, 2009
(000’s Omitted)
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | $ | — | $ | 24 | $ | 2,849 | $ | — | $ | — | $ | 2,873 | ||||||||||||
Foreign exchange contracts | — | — | — | (7 | ) | — | (7 | ) | ||||||||||||||||
Credit contracts | — | — | — | — | (39 | ) | (39 | ) | ||||||||||||||||
Total | $ | — | $ | 24 | $ | 2,849 | $ | (7 | ) | $ | (39 | ) | $ | 2,827 | ||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | — | (10 | ) | 627 | — | — | $ | 617 | ||||||||||||||||
Total | $ | — | $ | (10 | ) | $ | 627 | $ | — | $ | — | $ | 617 | |||||||||||
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. |
Futures and Options Transactions — The Fund is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset 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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of October 31, 2009. | |||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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. |
24
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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. The Fund, as shown on the Schedule of Investments, had outstanding purchased option contracts as of October 31, 2009. There were no transactions involving written option contracts during the year ended October 31, 2009. |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 16,954 | $ | 13,558 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 691 | ||
Accumulated Capital Losses * | (35,437 | ) | ||
Unrealized Appreciation † | 19,161 | |||
Total Accumulated Deficit | $ | (15,585 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
25
October 31, 2009
(000’s Omitted)
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $336 and increase accumulated net realized gain on investments by $336. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 12,098 | ||
2017 | 23,339 | |||
Total | $ | 35,437 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 services 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 | % |
26
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 year ended October 31, 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 year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | ||||||||||
October 31, | October 31, | October 31, | ||||||||||
2009 | 2008 | 2007 | ||||||||||
Class A Shares | 1.00 | % | 0.61 | % | 0.46 | %* | ||||||
Class B Shares | 1.83 | 1.45 | 1.25 | * | ||||||||
Class C Shares | 1.74 | 1.38 | 1.26 | * | ||||||||
Class I Shares | 0.75 | 0.38 | 0.27 | * | ||||||||
Class Y Shares | 0.65 | 0.30 | 0.24 | † |
* | From May 31, 2007 (date shares became available to the public), through October 31, 2007. | |
† | From August 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $1,435 and contingent deferred sales charges of $77 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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. |
27
October 31, 2009
(000’s Omitted)
For the year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $62. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $261 for providing such services. These fees are accrued daily and paid monthly. |
For the year ended October 31, 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 | $ | 293,725 | ||
Sales Proceeds Excluding U.S. Government Obligations | 236,426 | |||
Cost of Purchases for U.S. Government Obligations | 202,170 | |||
Sales Proceeds for U.S. Government Obligations | 183,747 |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 12,459 | 680 | (7,025 | ) | — | 6,114 | 12,059 | 415 | (6,100 | ) | — | 6,374 | ||||||||||||||||||||||||||||
Amount | $ | 96,754 | $ | 5,439 | $ | (55,376 | ) | $ | — | $ | 46,817 | $ | 111,930 | $ | 3,769 | $ | (54,644 | ) | $ | — | $ | 61,055 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,068 | 52 | (321 | ) | — | 799 | 816 | 24 | (253 | ) | — | 587 | ||||||||||||||||||||||||||||
Amount | $ | 8,333 | $ | 415 | $ | (2,536 | ) | $ | — | $ | 6,212 | $ | 7,570 | $ | 214 | $ | (2,287 | ) | $ | — | $ | 5,497 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 6,920 | 419 | (2,702 | ) | — | 4,637 | 9,710 | 244 | (2,509 | ) | — | 7,445 | ||||||||||||||||||||||||||||
Amount | $ | 54,226 | $ | 3,344 | $ | (21,069 | ) | $ | — | $ | 36,501 | $ | 90,974 | $ | 2,188 | $ | (22,221 | ) | $ | — | $ | 70,941 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,964 | 211 | (2,256 | ) | — | 1,919 | 4,628 | 156 | (2,605 | ) | — | 2,179 | ||||||||||||||||||||||||||||
Amount | $ | 31,796 | $ | 1,691 | $ | (17,756 | ) | $ | — | $ | 15,731 | $ | 43,202 | $ | 1,415 | $ | (23,234 | ) | $ | — | $ | 21,383 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 85 | 224 | (3,576 | ) | — | (3,267 | ) | 3,946 | 218 | (256 | ) | — | 3,908 | |||||||||||||||||||||||||||
Amount | $ | 631 | $ | 1,734 | $ | (27,572 | ) | $ | — | $ | (25,207 | ) | $ | 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) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 21 | $ | 169 | |||||
For the Year Ended October 31, 2008 | 5 | $ | 45 |
28
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
29
Net Asset Value | Net Realized | |||||||||||||||||||||||||||||||||||||||||||
at | and Unrealized | Total from | Dividends from | Distributions | Net Increase | |||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | (Decrease) in | Net Asset Value | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Net Asset Value | at End of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.35 | $ | 0.53 | $ | — | $ | 1.33 | $ | 1.86 | $ | (0.52 | ) | $ | — | $ | — | $ | (0.52 | ) | $ | 1.34 | $ | 8.69 | ||||||||||||||||||||
B | 7.35 | 0.46 | — | 1.33 | 1.79 | (0.45 | ) | — | — | (0.45 | ) | 1.34 | 8.69 | |||||||||||||||||||||||||||||||
C | 7.36 | 0.47 | — | 1.33 | 1.80 | (0.46 | ) | — | — | (0.46 | ) | 1.34 | 8.70 | |||||||||||||||||||||||||||||||
I | 7.37 | 0.54 | — | 1.34 | 1.88 | (0.54 | ) | — | — | (0.54 | ) | 1.34 | 8.71 | |||||||||||||||||||||||||||||||
Y | 7.35 | 0.57 | — | 1.32 | 1.89 | (0.55 | ) | — | — | (0.55 | ) | 1.34 | 8.69 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 9.75 | 0.65 | — | (2.39 | ) | (1.74 | ) | (0.66 | ) | — | — | (0.66 | ) | (2.40 | ) | 7.35 | ||||||||||||||||||||||||||||
B | 9.75 | 0.58 | — | (2.40 | ) | (1.82 | ) | (0.58 | ) | — | — | (0.58 | ) | (2.40 | ) | 7.35 | ||||||||||||||||||||||||||||
C | 9.76 | 0.59 | — | (2.40 | ) | (1.81 | ) | (0.59 | ) | — | — | (0.59 | ) | (2.40 | ) | 7.36 | ||||||||||||||||||||||||||||
I | 9.77 | 0.69 | — | (2.41 | ) | (1.72 | ) | (0.68 | ) | — | — | (0.68 | ) | (2.40 | ) | 7.37 | ||||||||||||||||||||||||||||
Y | 9.76 | 0.69 | — | (2.41 | ) | (1.72 | ) | (0.69 | ) | — | — | (0.69 | ) | (2.41 | ) | 7.35 | ||||||||||||||||||||||||||||
From (date shares became available to the public) May 31, 2007, through October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A(e) | 9.90 | 0.29 | — | (0.14 | ) | 0.15 | (0.30 | ) | — | — | (0.30 | ) | (0.15 | ) | 9.75 | |||||||||||||||||||||||||||||
B(e) | 9.90 | 0.26 | — | (0.15 | ) | 0.11 | (0.26 | ) | — | — | (0.26 | ) | (0.15 | ) | 9.75 | |||||||||||||||||||||||||||||
C(e) | 9.90 | 0.27 | — | (0.15 | ) | 0.12 | (0.26 | ) | — | — | (0.26 | ) | (0.14 | ) | 9.76 | |||||||||||||||||||||||||||||
I(e) | 9.90 | 0.31 | — | (0.13 | ) | 0.18 | (0.31 | ) | — | — | (0.31 | ) | (0.13 | ) | 9.77 | |||||||||||||||||||||||||||||
Y(h) | 9.57 | 0.12 | — | 0.19 | 0.31 | (0.12 | ) | — | — | (0.12 | ) | 0.19 | 9.76 |
(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) | Shares became available to the public on May 31, 2007. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on August 31, 2007. |
30
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||
26.24 | % | $ | 146,738 | 1.00 | % | 1.00 | % | 1.00 | % | 6.70 | % | 164 | % | |||||||||||||
25.20 | 14,397 | 1.83 | 1.83 | 1.83 | 5.87 | — | ||||||||||||||||||||
25.30 | 120,513 | 1.74 | 1.74 | 1.74 | 5.98 | — | ||||||||||||||||||||
26.48 | 45,664 | 0.75 | 0.75 | 0.75 | 7.00 | — | ||||||||||||||||||||
26.69 | 15,036 | 0.65 | 0.65 | 0.65 | 7.22 | — | ||||||||||||||||||||
(19.02 | ) | 79,242 | 0.97 | 0.61 | 0.61 | 7.14 | 132 | |||||||||||||||||||
(19.66 | ) | 6,308 | 1.81 | 1.45 | 1.45 | 6.33 | — | |||||||||||||||||||
(19.62 | ) | 67,863 | 1.75 | 1.38 | 1.38 | 6.40 | — | |||||||||||||||||||
(18.77 | ) | 24,508 | 0.75 | 0.38 | 0.38 | 7.37 | — | |||||||||||||||||||
(18.85 | ) | 36,751 | 0.67 | 0.30 | 0.30 | 7.49 | — | |||||||||||||||||||
1.53 | (f) | 42,949 | 1.01 | (g) | 0.46 | (g) | 0.46 | (g) | 7.15 | (g) | 40 | |||||||||||||||
1.21 | (f) | 2,644 | 1.80 | (g) | 1.25 | (g) | 1.25 | (g) | 6.42 | (g) | — | |||||||||||||||
1.31 | (f) | 17,275 | 1.81 | (g) | 1.26 | (g) | 1.26 | (g) | 6.47 | (g) | — | |||||||||||||||
1.84 | (f) | 11,212 | 0.82 | (g) | 0.27 | (g) | 0.27 | (g) | 7.49 | (g) | — | |||||||||||||||
3.28 | (f) | 10,631 | 0.80 | (g) | 0.25 | (g) | 0.25 | (g) | �� | 7.73 | (g) | — |
31
The Hartford Mutual Funds, Inc.
December 15, 2009
32
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
33
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 — 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009. |
34
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
35
U.S. Treasury* | 4.00 | % | ||
Other Direct Federal Obligations* | 1.00 | % | ||
Other Securities | 95.00 | % | ||
Total | 100.00 | % | ||
QII† | 100.00 | % |
* | The income received from federal obligations. | |
† | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.519 | N/A | N/A | 0.519 | ||||||||||||
Class B | 0.453 | N/A | N/A | 0.453 | ||||||||||||
Class C | 0.461 | N/A | N/A | 0.461 | ||||||||||||
Class I | 0.538 | N/A | N/A | 0.538 | ||||||||||||
Class Y | 0.547 | N/A | N/A | 0.547 |
36
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,163.10 | $ | 5.45 | $ | 1,000.00 | $ | 1,020.16 | $ | 5.09 | 1.00 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,158.40 | $ | 9.96 | $ | 1,000.00 | $ | 1,015.98 | $ | 9.30 | 1.83 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,157.20 | $ | 9.46 | $ | 1,000.00 | $ | 1,016.43 | $ | 8.84 | 1.74 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,164.20 | $ | 4.04 | $ | 1,000.00 | $ | 1,021.48 | $ | 3.77 | 0.74 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,165.20 | $ | 3.49 | $ | 1,000.00 | $ | 1,021.98 | $ | 3.26 | 0.64 | 184 | 365 |
37
38
39
40
41
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 | ||||
25 |
The Hartford Target Retirement 2010 Fund inception 09/30/2005 | ||
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks to maximize total return and | |
secondarily, to seek capital preservation. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
Target Retirement 2010 A# | 19.45 | % | 0.79 | % | ||||
Target Retirement 2010 A## | 12.88 | % | -0.60 | % | ||||
Target Retirement 2010 R3# | 19.24 | % | 0.65 | % | ||||
Target Retirement 2010 R4# | 19.58 | % | 0.89 | % | ||||
Target Retirement 2010 R5# | 19.65 | % | 1.00 | % | ||||
Target Retirement 2010 Y# | 19.56 | % | 1.02 | % | ||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 5.72 | % | ||||
S&P 500 Index | 9.78 | % | -2.03 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Classes R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(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 10/31/09, which excludes investment transactions as of this date. | |
(4) | The initial investment in Class A shares reflects the maximum sales charge. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
Powershares Emerging Markets Sovereign Debt Portfolio ETF | 0.5 | % | ||
SPDR DJ Wilshire International Real Estate ETF | 0.7 | |||
SPDR DJ Wilshire REIT ETF | 0.8 | |||
State Street Bank Money Market Fund | 0.0 | |||
The Hartford Capital Appreciation Fund, Class Y | 6.1 | |||
The Hartford Capital Appreciation II Fund, Class Y | 2.1 | |||
The Hartford Disciplined Equity Fund, Class Y | 2.1 | |||
The Hartford Dividend and Growth Fund, Class Y | 3.3 | |||
The Hartford Equity Income Fund, Class Y | 3.0 | |||
The Hartford Floating Rate Fund, Class Y | 4.0 | |||
The Hartford Fundamental Growth Fund, Class Y | 1.9 | |||
The Hartford Global Equity Fund, Class Y | 0.1 | |||
The Hartford Global Growth Fund, Class Y | 1.5 | |||
The Hartford Growth Fund, Class Y | 1.9 | |||
The Hartford Growth Opportunities Fund, Class Y | 1.7 | |||
The Hartford High Yield Fund, Class Y | 2.5 | |||
The Hartford Income Fund, Class Y | 6.5 | |||
The Hartford Inflation Plus Fund, Class Y | 9.0 | |||
The Hartford International Opportunities Fund, Class Y | 5.2 | |||
The Hartford International Small Company Fund, Class Y | 1.9 | |||
The Hartford MidCap Fund, Class Y | 2.1 | |||
The Hartford MidCap Growth Fund, Class Y | 0.6 | |||
The Hartford MidCap Value Fund, Class Y | 3.6 | |||
The Hartford Select SmallCap Value Fund, Class Y | 0.4 | |||
The Hartford Short Duration Fund, Class Y | 2.8 | |||
The Hartford Small Company Fund, Class Y | 1.0 | |||
The Hartford Strategic Income Fund, Class Y | 2.9 | |||
The Hartford Total Return Bond Fund, Class Y | 15.2 | |||
The Hartford Value Fund, Class Y | 13.4 | |||
The Hartford Value Opportunities Fund, Class Y | 3.1 | |||
Other Assets and Liabilities | 0.1 | |||
Total | 100.0 | % | ||
3
Schedule of Investments
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 97.9% | ||||||||||||
EQUITY FUNDS — 55.0% | ||||||||||||
44 | The Hartford Capital Appreciation Fund, Class Y | $ | 1,341 | |||||||||
42 | The Hartford Capital Appreciation II Fund, Class Y • | 465 | ||||||||||
44 | The Hartford Disciplined Equity Fund, Class Y | 475 | ||||||||||
46 | The Hartford Dividend and Growth Fund, Class Y | 741 | ||||||||||
61 | The Hartford Equity Income Fund, Class Y | 664 | ||||||||||
45 | The Hartford Fundamental Growth Fund, Class Y • | 423 | ||||||||||
2 | The Hartford Global Equity Fund, Class Y | 12 | ||||||||||
26 | The Hartford Global Growth Fund, Class Y • | 342 | ||||||||||
29 | The Hartford Growth Fund, Class Y • | 410 | ||||||||||
17 | The Hartford Growth Opportunities Fund, Class Y • | 370 | ||||||||||
88 | The Hartford International Opportunities Fund, Class Y | 1,148 | ||||||||||
39 | The Hartford International Small Company Fund, Class Y | 426 | ||||||||||
26 | The Hartford MidCap Fund, Class Y • | 465 | ||||||||||
17 | The Hartford MidCap Growth Fund, Class Y • | 130 | ||||||||||
90 | The Hartford MidCap Value Fund, Class Y | 790 | ||||||||||
12 | The Hartford Select SmallCap Value Fund, Class Y | 96 | ||||||||||
15 | The Hartford Small Company Fund, Class Y • | 223 | ||||||||||
310 | The Hartford Value Fund, Class Y | 2,962 | ||||||||||
65 | The Hartford Value Opportunities Fund, Class Y | 684 | ||||||||||
Total equity funds (cost $11,761) | $ | 12,167 | ||||||||||
FIXED INCOME FUNDS — 42.9% | ||||||||||||
106 | The Hartford Floating Rate Fund, Class Y | $ | 880 | |||||||||
83 | The Hartford High Yield Fund, Class Y | 556 | ||||||||||
152 | The Hartford Income Fund, Class Y | 1,449 | ||||||||||
174 | The Hartford Inflation Plus Fund, Class Y | 1,986 | ||||||||||
63 | The Hartford Short Duration Fund, Class Y | 609 | ||||||||||
73 | The Hartford Strategic Income Fund, Class Y | 636 | ||||||||||
326 | The Hartford Total Return Bond Fund, Class Y | 3,369 | ||||||||||
Total fixed income funds (cost $9,072) | $ | 9,485 | ||||||||||
Total investments in affiliated investment companies (cost $20,833) | $ | 21,652 | ||||||||||
EXCHANGE TRADED FUNDS — 2.0% | ||||||||||||
4 | Powershares Emerging Markets Sovereign Debt Portfolio ETF | $ | 116 | |||||||||
4 | SPDR DJ Wilshire International Real Estate ETF | 154 | ||||||||||
4 | SPDR DJ Wilshire REIT ETF | 177 | ||||||||||
Total exchange traded funds (cost $549) | $ | 447 | ||||||||||
Total long-term investments (cost $21,382) | $ | 22,099 | ||||||||||
SHORT-TERM INVESTMENTS — 0.0% | ||||||||||||
Investment Pools and Funds — 0.0% | ||||||||||||
1 | State Street Bank Money Market Fund | $ | 1 | |||||||||
Total short-term investments (cost $1) | $ | 1 | ||||||||||
Total investments (cost $21,383) 5 | 99 .9 | % | $ | 22,100 | ||||||||
Other assets and liabilities | 0 .1 | % | 24 | |||||||||
Total net assets | 100.0 | % | $ | 22,124 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
5 | At October 31, 2009, the cost of securities for federal income tax purposes was $21,735 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 1,276 | ||
Unrealized Depreciation | (911 | ) | ||
Net Unrealized Appreciation | $ | 365 | ||
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 21,652 | $ | 21,652 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 447 | 447 | — | — | ||||||||||||
Short-Term Investments | 1 | 1 | — | — | ||||||||||||
Total | $ | 22,100 | $ | 22,100 | $ | — | $ | — | ||||||||
5
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $550) | $ | 448 | ||
Investments in underlying affiliated funds, at market value (cost $20,833) | 21,652 | |||
Receivables: | ||||
Fund shares sold | 14 | |||
Dividends and interest | 36 | |||
Other assets | 47 | |||
Total assets | 22,197 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 6 | |||
Fund shares redeemed | 59 | |||
Investment management fees | — | |||
Distribution fees | 1 | |||
Accrued expenses | 7 | |||
Total liabilities | 73 | |||
Net assets | $ | 22,124 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 24,162 | |||
Accumulated undistributed net investment income | 312 | |||
Accumulated net realized loss on investments | (3,067 | ) | ||
Unrealized appreciation of investments | 717 | |||
Net assets | $ | 22,124 | ||
Shares authorized | 950,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.50/$8.99 | ||
Shares outstanding | 1,099 | |||
Net assets | $ | 9,342 | ||
Class R3: Net asset value per share | $ | 8.48 | ||
Shares outstanding | 186 | |||
Net assets | $ | 1,578 | ||
Class R4: Net asset value per share | $ | 8.51 | ||
Shares outstanding | 1,060 | |||
Net assets | $ | 9,020 | ||
Class R5: Net asset value per share | $ | 8.51 | ||
Shares outstanding | 241 | |||
Net assets | $ | 2,051 | ||
Class Y: Net asset value per share | $ | 8.50 | ||
Shares outstanding | 16 | |||
Net assets | $ | 133 | ||
6
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 17 | ||
Dividends from underlying affiliated funds | 497 | |||
Interest | — | |||
Total investment income | 514 | |||
Expenses: | ||||
Investment management fees | 25 | |||
Administrative services fees | 12 | |||
Transfer agent fees | 6 | |||
Distribution fees | ||||
Class A | 18 | |||
Class B* | 3 | |||
Class C* | 4 | |||
Class R3 | 3 | |||
Class R4 | 16 | |||
Custodian fees | 1 | |||
Accounting services fees | 2 | |||
Registration and filing fees | 61 | |||
Board of Directors’ fees | 2 | |||
Audit fees | 6 | |||
Other expenses | 8 | |||
Total expenses (before waivers) | 167 | |||
Expense waivers | (134 | ) | ||
Total waivers | (134 | ) | ||
Total expenses, net | 33 | |||
Net Investment Income | 481 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (1,950 | ) | ||
Net Realized Loss on Investments | (1,950 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 4,777 | |||
Net Changes in Unrealized Appreciation of Investments | 4,777 | |||
Net Gain on Investments | 2,827 | |||
Net Increase in Net Assets Resulting from Operations | $ | 3,308 | ||
* | Classes B and C were merged into Class A on July 24, 2009. Please refer to the Notes to Financial Statements for further details. |
7
Statement of Changes in Net Assets
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 481 | $ | 358 | ||||
Net realized loss on investments | (1,950 | ) | (946 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 4,777 | (4,566 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 3,308 | (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 | 1,880 | † | 2,108 | |||||
Class B* | (580 | )‡ | 95 | |||||
Class C* | (762 | )§ | 82 | |||||
Class R3 | 1,400 | 1 | ||||||
Class R4 | 2,865 | 6,073 | ||||||
Class R5 | 636 | 1,626 | ||||||
Class Y | 2 | 10 | ||||||
Net increase from capital share transactions | 5,441 | 9,995 | ||||||
Net Increase In Net Assets | 8,532 | 4,152 | ||||||
Net Assets: | ||||||||
Beginning of period | 13,592 | 9,440 | ||||||
End of period | $ | 22,124 | $ | 13,592 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 312 | $ | 48 | ||||
* | Classes B and C were merged into Class A on July 24, 2009. Please refer to the Notes to Financial Statements for further details. | |
† | Includes merger activity in the amount of $985. | |
‡ | Includes merger activity in the amount of $(423). | |
§ | Includes merger activity in the amount of $(562). |
8
Notes to Financial Statements
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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%. 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. | ||
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 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 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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. | ||
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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 |
9
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. 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 Valuation Time. 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 are 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may use 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 October 31, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. |
10
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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
11
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings — 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 217 | $ | 607 | ||||
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). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 312 | ||
Accumulated Capital Losses * | (2,715 | ) | ||
Unrealized Appreciation † | 365 | |||
Total Accumulated Deficit | $ | (2,038 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 919 | ||
2017 | 1,796 | |||
Total | $ | 2,715 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 |
12
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 year ended October 31, 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 services 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 year ended October 31, 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 R3 | Class R4 | Class R5 | Class Y | ||||
1.00% | 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, 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $16 and contingent deferred sales charges of $2 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Fund 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 up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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 year ended October 31, 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. |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $6 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class Y | 16 |
6. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 10,886 | ||
Sales Proceeds Excluding U.S. Government Obligations | 5,125 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 583 | 15 | (523 | ) | 123 | 198 | 544 | 50 | (401 | ) | — | 193 | ||||||||||||||||||||||||||||
Amount | $ | 4,556 | $ | 100 | $ | (3,761 | ) | $ | 985 | $ | 1,880 | $ | 5,204 | $ | 496 | $ | (3,592 | ) | $ | — | $ | 2,108 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 2 | 1 | (6 | ) | (53 | ) | (56 | ) | 24 | 3 | (21 | ) | — | 6 | ||||||||||||||||||||||||||
Amount | $ | 13 | $ | 4 | $ | (174 | ) | $ | (423 | ) | $ | (580 | ) | $ | 235 | $ | 31 | $ | (171 | ) | $ | — | $ | 95 | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 23 | 1 | (35 | ) | (71 | ) | (82 | ) | 47 | 3 | (38 | ) | — | 12 | ||||||||||||||||||||||||||
Amount | $ | 152 | $ | 9 | $ | (361 | ) | $ | (562 | ) | $ | (762 | ) | $ | 420 | $ | 32 | $ | (370 | ) | $ | — | $ | 82 | ||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 193 | — | (8 | ) | — | 185 | — | — | — | — | — | |||||||||||||||||||||||||||||
Amount | $ | 1,467 | $ | 2 | $ | (69 | ) | $ | — | $ | 1,400 | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 527 | 12 | (146 | ) | — | 393 | 780 | 11 | (165 | ) | — | 626 | ||||||||||||||||||||||||||||
Amount | $ | 3,874 | $ | 81 | $ | (1,090 | ) | $ | — | $ | 2,865 | $ | 7,414 | $ | 98 | $ | (1,439 | ) | $ | — | $ | 6,073 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 128 | 3 | (46 | ) | — | 85 | 232 | 2 | (79 | ) | — | 155 | ||||||||||||||||||||||||||||
Amount | $ | 942 | $ | 17 | $ | (323 | ) | $ | — | $ | 636 | $ | 2,189 | $ | 23 | $ | (586 | ) | $ | — | $ | 1,626 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | — | 1 | — | — | 1 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 2 | $ | — | $ | — | $ | 2 | $ | — | $ | 10 | $ | — | $ | — | $ | 10 |
14
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | — | $ | 3 | |||||
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. |
9. | Class Mergers: | |
At a Special Meeting of Shareholders held on July 16, 2009, the shareholders of the Fund approved the reclassification of Class B shares and Class C shares as Class A shares of the Fund. | ||
Effective with the close of business on July 24, 2009, Classes B and C were merged into Class A. The mergers were accomplished by tax-free exchanges as detailed below: |
Class A | Class B | Class C | ||||||||||
Shares exchanged | N/A | 53 | 71 | |||||||||
Shares issued — to Class B shareholders | 53 | N/A | N/A | |||||||||
Shares issued — to Class C shareholders | 70 | N/A | N/A | |||||||||
Net assets immediately before merger | $ | 7,729 | $ | 423 | $ | 562 | ||||||
Net assets immediately after merger | $ | 8,714 | N/A | N/A |
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
15
Financial Highlights
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A(f) | $ | 7.24 | $ | 0.22 | $ | — | $ | 1.15 | $ | 1.37 | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | 1.26 | $ | 8.50 | ||||||||||||||||||||
R3 | 7.23 | 0.18 | — | 1.18 | 1.36 | (0.11 | ) | — | — | (0.11 | ) | 1.25 | 8.48 | |||||||||||||||||||||||||||||||
R4 | 7.23 | 0.22 | — | 1.17 | 1.39 | (0.11 | ) | — | — | (0.11 | ) | 1.28 | 8.51 | |||||||||||||||||||||||||||||||
R5 | 7.24 | 0.22 | — | 1.16 | 1.38 | (0.11 | ) | — | — | (0.11 | ) | 1.27 | 8.51 | |||||||||||||||||||||||||||||||
Y | 7.23 | 0.23 | — | 1.15 | 1.38 | (0.11 | ) | — | — | (0.11 | ) | 1.27 | 8.50 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
R3 | 10.66 | 0.26 | — | (3.11 | ) | (2.85 | ) | (0.37 | ) | (0.21 | ) | — | (0.58 | ) | (3.43 | ) | 7.23 | |||||||||||||||||||||||||||
R4 | 10.66 | 0.36 | — | (3.17 | ) | (2.81 | ) | (0.41 | ) | (0.21 | ) | — | (0.62 | ) | (3.43 | ) | 7.23 | |||||||||||||||||||||||||||
R5 | 10.67 | 0.37 | — | (3.16 | ) | (2.79 | ) | (0.43 | ) | (0.21 | ) | — | (0.64 | ) | (3.43 | ) | 7.24 | |||||||||||||||||||||||||||
Y | 10.66 | 0.33 | — | (3.11 | ) | (2.78 | ) | (0.44 | ) | (0.21 | ) | — | (0.65 | ) | (3.43 | ) | 7.23 | |||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 9.65 | 0.28 | — | 1.01 | 1.29 | (0.28 | ) | — | — | (0.28 | ) | 1.01 | 10.66 | |||||||||||||||||||||||||||||||
R3(g) | 9.76 | 0.14 | — | 0.89 | 1.03 | (0.13 | ) | — | — | (0.13 | ) | 0.90 | 10.66 | |||||||||||||||||||||||||||||||
R4(g) | 9.76 | 0.16 | — | 0.89 | 1.05 | (0.15 | ) | — | — | (0.15 | ) | 0.90 | 10.66 | |||||||||||||||||||||||||||||||
R5(g) | 9.76 | 0.19 | — | 0.89 | 1.08 | (0.17 | ) | — | — | (0.17 | ) | 0.91 | 10.67 | |||||||||||||||||||||||||||||||
Y | 9.65 | 0.32 | — | 0.99 | 1.31 | (0.30 | ) | — | — | (0.30 | ) | 1.01 | 10.66 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||
Y | 9.83 | 0.50 | — | 0.21 | 0.71 | (0.53 | ) | — | (0.36 | ) | (0.89 | ) | (0.18 | ) | 9.65 | |||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
Y(j) | 10.00 | 0.02 | — | (0.19 | ) | (0.17 | ) | — | — | — | — | (0.17 | ) | 9.83 |
(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) | Classes B and C were merged into Class A on July 24, 2009 (See Class Mergers in the accompanying Notes to Financial Statements). | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Not annualized. | |
(i) | Annualized. | |
(j) | Commenced operations on September 30, 2005. |
16
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||||
Net Assets at | Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net | ||||||||||||||||||||||
End of Period | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio Turnover | |||||||||||||||||||||
Total Return(b) | (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Rate(d) | ||||||||||||||||||||
19.29 | % | $ | 9,342 | 0.95 | % | 0.24 | % | 0.24 | % | 3.00 | % | 31 | % | |||||||||||||
19.24 | 1,578 | 1.25 | 0.39 | 0.39 | 2.37 | — | ||||||||||||||||||||
19.58 | 9,020 | 1.03 | 0.09 | 0.09 | 3.00 | — | ||||||||||||||||||||
19.48 | 2,051 | 0.73 | 0.04 | 0.04 | 2.99 | — | ||||||||||||||||||||
19.56 | 133 | 0.65 | 0.04 | 0.04 | 3.12 | — | ||||||||||||||||||||
(27.74 | ) | 6,520 | 1.02 | 0.42 | 0.42 | 2.87 | 68 | |||||||||||||||||||
(28.14 | ) | 8 | 1.47 | 0.87 | 0.87 | 2.70 | — | |||||||||||||||||||
(27.84 | ) | 4,823 | 1.04 | 0.45 | 0.45 | 1.67 | — | |||||||||||||||||||
(27.64 | ) | 1,131 | 0.71 | 0.11 | 0.11 | 1.86 | — | |||||||||||||||||||
(27.60 | ) | 111 | 0.76 | 0.16 | 0.16 | 3.40 | — | |||||||||||||||||||
13.55 | 7,547 | 1.81 | 0.50 | 0.50 | 2.46 | 56 | ||||||||||||||||||||
10.56 | (h) | 11 | 2.32 | (i) | 0.90 | (i) | 0.90 | (i) | 1.62 | (i) | — | |||||||||||||||
10.88 | (h) | 442 | 1.97 | (i) | 0.60 | (i) | 0.60 | (i) | 2.03 | (i) | — | |||||||||||||||
11.15 | (h) | 11 | 1.72 | (i) | 0.30 | (i) | 0.30 | (i) | 2.23 | (i) | — | |||||||||||||||
13.83 | 153 | 1.54 | 0.20 | 0.20 | 3.21 | — | ||||||||||||||||||||
7.43 | 1,618 | 8.32 | 0.54 | 0.54 | 2.01 | 10 | ||||||||||||||||||||
7.62 | 135 | 8.02 | 0.23 | 0.23 | 2.31 | — | ||||||||||||||||||||
(1.80 | )(h) | 11 | 0.65 | (i) | 0.49 | (i) | 0.49 | (i) | 2.53 | (i) | 12 | |||||||||||||||
(1.70 | )(h) | 10 | 0.32 | (i) | 0.21 | (i) | 0.21 | (i) | 2.65 | (i) | — |
17
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
18
Directors and Officers (Unaudited)
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
19
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 — 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009. |
20
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
21
Federal Tax Information (Unaudited)
U.S. Treasury* | 6.00 | % | ||
Other Direct Federal Obligations* | 1.00 | % | ||
Other Securities | 93.00 | % | ||
Total | 100.00 | % | ||
DRD† | 70.00 | % | ||
QDI‡ | 75.00 | % | ||
QII§ | 100.00 | % |
* | The income received from federal obligations. | |
† | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
‡ | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. | |
§ | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.109 | N/A | N/A | 0.109 | ||||||||||||
Class B | 0.095 | N/A | N/A | 0.095 | ||||||||||||
Class C | 0.098 | N/A | N/A | 0.098 | ||||||||||||
Class R3 | 0.113 | N/A | N/A | 0.113 | ||||||||||||
Class R4 | 0.108 | N/A | N/A | 0.108 | ||||||||||||
Class R5 | 0.112 | N/A | N/A | 0.112 | ||||||||||||
Class Y | 0.114 | N/A | N/A | 0.114 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,180.60 | $ | 1.37 | $ | 1,000.00 | $ | 1,023.95 | $ | 1.28 | 0.25 | % | 184 | 365 | |||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,181.10 | $ | 2.14 | $ | 1,000.00 | $ | 1,023.24 | $ | 1.99 | 0.39 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,181.90 | $ | 0.55 | $ | 1,000.00 | $ | 1,024.70 | $ | 0.51 | 0.10 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,181.90 | $ | 0.28 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,182.20 | $ | 0.28 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | 184 | 365 |
23
Fund Name | For | Against | Abstain | |||||||||
The Hartford Target Retirement 2010 Fund — Class B shares | 42,049.69 | 0 | 0 |
Fund Name | For | Against | Abstain | |||||||||
The Hartford Target Retirement 2010 Fund — Class C shares | 48,378.00 | 972.00 | 1,562.40 |
24
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
25
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
26
27
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
28
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks to maximize total return and secondarily, to seek capital preservation. |
Growth of a $10,000 investment in Class R3
1 | Since | |||||||
Year | Inception | |||||||
Target Retirement 2015 R3 | 18.33 | % | 18.33 | % | ||||
Target Retirement 2015 R4 | 18.70 | % | 18.70 | % | ||||
Target Retirement 2015 R5 | 18.71 | % | 18.71 | % | ||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 13.79 | % | ||||
S&P 500 Index | 9.78 | % | 9.78 | % |
(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 10/31/09, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
Powershares Emerging Markets Sovereign Debt Portfolio ETF | 0.0 | % | ||
SPDR DJ Wilshire International Real Estate ETF | 1.2 | |||
SPDR DJ Wilshire REIT ETF | 1.0 | |||
State Street Bank Money Market Fund | 0.0 | |||
The Hartford Capital Appreciation Fund, Class Y | 7.7 | |||
The Hartford Capital Appreciation II Fund, Class Y | 4.2 | |||
The Hartford Disciplined Equity Fund, Class Y | 3.0 | |||
The Hartford Dividend and Growth Fund, Class Y | 3.5 | |||
The Hartford Equity Income Fund, Class Y | 0.7 | |||
The Hartford Floating Rate Fund, Class Y | 2.2 | |||
The Hartford Fundamental Growth Fund, Class Y | 5.7 | |||
The Hartford Global Equity Fund, Class Y | 2.3 | |||
The Hartford Global Growth Fund, Class Y | 1.4 | |||
The Hartford Growth Fund, Class Y | 1.1 | |||
The Hartford High Yield Fund, Class Y | 0.6 | |||
The Hartford Income Fund, Class Y | 1.8 | |||
The Hartford Inflation Plus Fund, Class Y | 7.5 | |||
The Hartford International Opportunities Fund, Class Y | 4.4 | |||
The Hartford International Small Company Fund, Class Y | 2.8 | |||
The Hartford MidCap Fund, Class Y | 1.5 | |||
The Hartford MidCap Growth Fund, Class Y | 0.1 | |||
The Hartford MidCap Value Fund, Class Y | 4.0 | |||
The Hartford Select MidCap Value Fund, Class Y | 0.4 | |||
The Hartford Select SmallCap Value Fund, Class Y | 2.3 | |||
The Hartford Short Duration Fund, Class Y | 6.7 | |||
The Hartford Small Company Fund, Class Y | 1.6 | |||
The Hartford Strategic Income Fund, Class Y | 5.0 | |||
The Hartford Total Return Bond Fund, Class Y | 14.9 | |||
The Hartford Value Fund, Class Y | 11.2 | |||
The Hartford Value Opportunities Fund, Class Y | 0.6 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 97.2% | ||||||||||||
EQUITY FUNDS — 58.5% | ||||||||||||
14 | The Hartford Capital Appreciation Fund, Class Y | $ | 410 | |||||||||
21 | The Hartford Capital Appreciation II Fund, Class Y • | 227 | ||||||||||
15 | The Hartford Disciplined Equity Fund, Class Y | 158 | ||||||||||
11 | The Hartford Dividend and Growth Fund, Class Y | 187 | ||||||||||
4 | The Hartford Equity Income Fund, Class Y | 38 | ||||||||||
33 | The Hartford Fundamental Growth Fund, Class Y • | 307 | ||||||||||
16 | The Hartford Global Equity Fund, Class Y | 124 | ||||||||||
6 | The Hartford Global Growth Fund, Class Y • | 77 | ||||||||||
4 | The Hartford Growth Fund, Class Y • | 57 | ||||||||||
18 | The Hartford International Opportunities Fund, Class Y | 234 | ||||||||||
14 | The Hartford International Small Company Fund, Class Y | 150 | ||||||||||
5 | The Hartford MidCap Fund, Class Y • | 83 | ||||||||||
1 | The Hartford MidCap Growth Fund, Class Y • | 8 | ||||||||||
24 | The Hartford MidCap Value Fund, Class Y | 212 | ||||||||||
3 | The Hartford Select MidCap Value Fund, Class Y | 23 | ||||||||||
15 | The Hartford Select SmallCap Value Fund, Class Y | 121 | ||||||||||
6 | The Hartford Small Company Fund, Class Y • | 87 | ||||||||||
63 | The Hartford Value Fund, Class Y | 598 | ||||||||||
3 | The Hartford Value Opportunities Fund, Class Y | 32 | ||||||||||
Total equity funds (cost $2,700) | $ | 3,133 | ||||||||||
FIXED INCOME FUNDS — 38.7% | ||||||||||||
14 | The Hartford Floating Rate Fund, Class Y | $ | 118 | |||||||||
5 | The Hartford High Yield Fund, Class Y | 32 | ||||||||||
10 | The Hartford Income Fund, Class Y | 94 | ||||||||||
35 | The Hartford Inflation Plus Fund, Class Y | 399 | ||||||||||
37 | The Hartford Short Duration Fund, Class Y | 357 | ||||||||||
31 | The Hartford Strategic Income Fund, Class Y | 266 | ||||||||||
77 | The Hartford Total Return Bond Fund, Class Y | 794 | ||||||||||
Total fixed income funds (cost $1,907) | $ | 2,060 | ||||||||||
Total investments in affiliated investment companies (cost $4,607) | $ | 5,193 | ||||||||||
EXCHANGE TRADED FUNDS — 2.2% | ||||||||||||
— | Powershares Emerging Markets Sovereign Debt Portfolio ETF | $ | 1 | |||||||||
2 | SPDR DJ Wilshire International Real Estate ETF | 63 | ||||||||||
1 | SPDR DJ Wilshire REIT ETF | 55 | ||||||||||
Total exchange traded funds (cost $103) | $ | 119 | ||||||||||
Total long-term investments (cost $4,710) | $ | 5,312 | ||||||||||
SHORT-TERM INVESTMENTS — 0.0% | ||||||||||||
Investment Pools and Funds — 0.0% | ||||||||||||
— | State Street Bank Money Market Fund | $ | — | |||||||||
Total short-term investments (cost $—) | $ | — | ||||||||||
Total investments (cost $4,710) ▲ | 99.4 | % | $ | 5,312 | ||||||||
Other assets and liabilities | 0.6 | % | 33 | |||||||||
Total net assets | 100.0 | % | $ | 5,345 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $4,718 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
�� | ||||
Unrealized Appreciation | $ | 606 | ||
Unrealized Depreciation | (12 | ) | ||
Net Unrealized Appreciation | $ | 594 | ||
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 5,193 | $ | 5,193 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 119 | 119 | — | — | ||||||||||||
Short-Term Investments | — | — | — | — | ||||||||||||
Total | $ | 5,312 | $ | 5,312 | $ | — | $ | — | ||||||||
5
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $103) | $ | 119 | ||
Investments in underlying affiliated funds, at market value (cost $4,607) | 5,193 | |||
Receivables: | ||||
Fund shares sold | — | |||
Dividends and interest | 7 | |||
Other assets | 32 | |||
Total assets | 5,351 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | — | |||
Fund shares redeemed | — | |||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 6 | |||
Total liabilities | 6 | |||
Net assets | $ | 5,345 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 4,737 | |||
Accumulated undistributed net investment income | 51 | |||
Accumulated net realized loss on investments | (45 | ) | ||
Unrealized appreciation of investments | 602 | |||
Net assets | $ | 5,345 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 11.69 | ||
Shares outstanding | 171 | |||
Net assets | $ | 2,003 | ||
Class R4: Net asset value per share | $ | 11.72 | ||
Shares outstanding | 161 | |||
Net assets | $ | 1,883 | ||
Class R5: Net asset value per share | $ | 11.72 | ||
Shares outstanding | 124 | |||
Net assets | $ | 1,459 | ||
6
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 5 | ||
Dividends from underlying affiliated funds | 87 | |||
Interest | — | |||
Total investment income | 92 | |||
Expenses: | ||||
Investment management fees | 5 | |||
Administrative services fees | 5 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 6 | |||
Class R4 | 3 | |||
Custodian fees | 1 | |||
Accounting services fees | — | |||
Registration and filing fees | 37 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 5 | |||
Other expenses | 4 | |||
Total expenses (before waivers) | 67 | |||
Expense waivers | (61 | ) | ||
Total waivers | (61 | ) | ||
Total expenses, net | 6 | |||
Net Investment Income | 86 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (45 | ) | ||
Net Realized Loss on Investments | (45 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 602 | |||
Net Changes in Unrealized Appreciation of Investments . | 602 | |||
Net Gain on Investments | 557 | |||
Net Increase in Net Assets Resulting from Operations | $ | 643 | ||
7
For the | ||||||||
For the | One-Day | |||||||
Year Ended | Period Ended | |||||||
October 31, 2009 | October 31, 2008* | |||||||
Operations: | ||||||||
Net investment income | $ | 86 | $ | — | ||||
Net realized loss on investments | (45 | ) | — | |||||
Net unrealized appreciation of investments | 602 | — | ||||||
Net Increase In Net Assets Resulting From Operations | 643 | — | ||||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class R3 | (11 | ) | — | |||||
Class R4 | (12 | ) | — | |||||
Class R5 | (12 | ) | — | |||||
Total distributions | (35 | ) | — | |||||
Capital Share Transactions: | ||||||||
Class R3 | 771 | 1,000 | ||||||
Class R4 | 692 | 1,000 | ||||||
Class R5 | 274 | 1,000 | ||||||
Net increase from capital share transactions | 1,737 | 3,000 | ||||||
Net Increase In Net Assets | 2,345 | 3,000 | ||||||
Net Assets: | ||||||||
Beginning of period | 3,000 | — | ||||||
End of period | $ | 5,345 | $ | 3,000 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 51 | $ | — | ||||
* | Commencement of operations. |
8
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 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 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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. | ||
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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 |
9
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. 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 Valuation Time. 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 are 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may use 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 October 31, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. |
10
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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
11
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings — 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, 2009 | ||||
Ordinary Income | $ | 35 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 51 | ||
Accumulated Capital Losses * | (38 | ) | ||
Unrealized Appreciation † | 595 | |||
Total Accumulated Earnings | $ | 608 | ||
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2017 | $ | 38 | ||
Total | $ | 38 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
12
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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 a Distribution and Service Plan 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. |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated in an amount that rounds to zero for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of October 31, 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 year ended October 31, 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 | $ | 5,246 | ||
Sales Proceeds Excluding U.S. Government Obligations | 491 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and for the one-day period ended October 31, 2008: |
For the Year Ended October 31, 2009 | For the One-Day Period 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 R3 | �� | |||||||||||||||||||||||||||||||||||||||
Shares | 83 | 1 | (13 | ) | — | 71 | 100 | — | — | — | 100 | |||||||||||||||||||||||||||||
Amount | $ | 889 | $ | 11 | $ | (129 | ) | $ | — | $ | 771 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 60 | 1 | — | — | 61 | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | 680 | $ | 12 | $ | — | $ | — | $ | 692 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | ||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 23 | 1 | — | — | 24 | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | 263 | $ | 12 | $ | (1 | ) | $ | — | $ | 274 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 |
14
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008 through October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.21 | $ | — | $ | 1.59 | $ | 1.80 | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | 1.69 | $ | 11.69 | ||||||||||||||||||||
R4 | 10.00 | 0.23 | — | 1.61 | 1.84 | (0.12 | ) | — | — | (0.12 | ) | 1.72 | 11.72 | |||||||||||||||||||||||||||||||
R5 | 10.00 | 0.26 | — | 1.58 | 1.84 | (0.12 | ) | — | — | (0.12 | ) | 1.72 | 11.72 |
(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 and the complete redemption of the investment at net asset value at the end of each period. | |
(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. |
16
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Net Assets at | Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net | ||||||||||||||||||||||||
End of Period | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Rate(d) | ||||||||||||||||||||||
18.33 | % | $ | 2,003 | 2.24 | % | 0.37 | % | 0.37 | % | 2.27 | % | 15 | % | |||||||||||||||
18.70 | 1,883 | 1.92 | 0.07 | 0.07 | 2.61 | — | ||||||||||||||||||||||
18.71 | 1,459 | 1.65 | 0.02 | 0.02 | 2.67 | — |
17
The Hartford Mutual Funds, Inc.
December 15, 2009
18
19
Directors and Officers (Unaudited) — (continued)
20
888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov.
21
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class R3 | 0.114 | N/A | N/A | 0.114 | ||||||||||||
Class R4 | 0.119 | N/A | N/A | 0.119 | ||||||||||||
Class R5 | 0.120 | N/A | N/A | 0.120 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,183.20 | $ | 1.98 | $ | 1,000.00 | $ | 1,023.39 | $ | 1.84 | 0.36 | % | 184 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,185.00 | $ | 0.33 | $ | 1,000.00 | $ | 1,024.90 | $ | 0.31 | 0.06 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,185.00 | $ | 0.06 | $ | 1,000.00 | $ | 1,025.16 | $ | 0.05 | 0.01 | 184 | 365 |
23
24
25
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
26
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Target Retirement 2020 Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 | ||||
25 |
(subadvised by Hartford Investment Management Company) | Investment objective – Seeks to maximize total return and secondarily, to seek capital preservation. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
Target Retirement 2020 A# | 19.38 | % | 0.16 | % | ||||
Target Retirement 2020 A## | 12.81 | % | -1.22 | % | ||||
Target Retirement 2020 R3# | 19.35 | % | 0.01 | % | ||||
Target Retirement 2020 R4# | 19.53 | % | 0.22 | % | ||||
Target Retirement 2020 R5# | 19.59 | % | 0.36 | % | ||||
Target Retirement 2020 Y# | 19.63 | % | 0.42 | % | ||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 5.72 | % | ||||
S&P 500 Index | 9.78 | % | -2.03 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Classes R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(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 10/31/09, which excludes investment transactions as of this date. | |
(4) | The initial investment in Class A shares reflects the maximum sales charge. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
Powershares Emerging Markets Sovereign Debt Portfolio ETF | 0.1 | % | ||
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 | 13.0 | |||
The Hartford Capital Appreciation II Fund, Class Y | 2.0 | |||
The Hartford Disciplined Equity Fund, Class Y | 1.7 | |||
The Hartford Dividend and Growth Fund, Class Y | 2.5 | |||
The Hartford Equity Income Fund, Class Y | 1.8 | |||
The Hartford Floating Rate Fund, Class Y | 1.8 | |||
The Hartford Fundamental Growth Fund, Class Y | 1.0 | |||
The Hartford Global Equity Fund, Class Y | 1.0 | |||
The Hartford Global Growth Fund, Class Y | 2.1 | |||
The Hartford Growth Fund, Class Y | 4.0 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.0 | |||
The Hartford High Yield Fund, Class Y | 1.6 | |||
The Hartford Income Fund, Class Y | 1.8 | |||
The Hartford Inflation Plus Fund, Class Y | 6.2 | |||
The Hartford International Opportunities Fund, Class Y | 4.2 | |||
The Hartford International Small Company Fund, Class Y | 4.6 | |||
The Hartford MidCap Fund, Class Y | 0.7 | |||
The Hartford MidCap Growth Fund, Class Y | 1.3 | |||
The Hartford MidCap Value Fund, Class Y | 0.3 | |||
The Hartford Select MidCap Value Fund, Class Y | 1.0 | |||
The Hartford Select SmallCap Value Fund, Class Y | 4.5 | |||
The Hartford Short Duration Fund, Class Y | 2.7 | |||
The Hartford Small Company Fund, Class Y | 1.5 | |||
The Hartford Strategic Income Fund, Class Y | 6.1 | |||
The Hartford Total Return Bond Fund, Class Y | 11.7 | |||
The Hartford Value Fund, Class Y | 15.8 | |||
The Hartford Value Opportunities Fund, Class Y | 1.2 | |||
Other Assets and Liabilities | 0.2 | |||
Total | 100.0 | % | ||
3
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 98.1% | ||||||||||||
EQUITY FUNDS - 66.2% | ||||||||||||
198 | The Hartford Capital Appreciation Fund, Class Y | $ | 5,989 | |||||||||
85 | The Hartford Capital Appreciation II Fund, Class Y• | 929 | ||||||||||
74 | The Hartford Disciplined Equity Fund, Class Y | 796 | ||||||||||
72 | The Hartford Dividend and Growth Fund, Class Y | 1,168 | ||||||||||
75 | The Hartford Equity Income Fund, Class Y | 809 | ||||||||||
48 | The Hartford Fundamental Growth Fund, Class Y• | 451 | ||||||||||
55 | The Hartford Global Equity Fund, Class Y | 444 | ||||||||||
72 | The Hartford Global Growth Fund, Class Y• | 958 | ||||||||||
129 | The Hartford Growth Fund, Class Y• | 1,826 | ||||||||||
43 | The Hartford Growth Opportunities Fund, Class Y• | 937 | ||||||||||
147 | The Hartford International Opportunities Fund, Class Y | 1,920 | ||||||||||
196 | The Hartford International Small Company Fund, Class Y | 2,137 | ||||||||||
19 | The Hartford MidCap Fund, Class Y• | 329 | ||||||||||
80 | The Hartford MidCap Growth Fund, Class Y• | 614 | ||||||||||
18 | The Hartford MidCap Value Fund, Class Y | 158 | ||||||||||
61 | The Hartford Select MidCap Value Fund, Class Y | 472 | ||||||||||
260 | The Hartford Select SmallCap Value Fund, Class Y | 2,066 | ||||||||||
47 | The Hartford Small Company Fund, Class Y• | 701 | ||||||||||
766 | The Hartford Value Fund, Class Y | 7,316 | ||||||||||
54 | The Hartford Value Opportunities Fund, Class Y | 570 | ||||||||||
Total equity funds (cost $32,948) | $ | 30,590 | ||||||||||
FIXED INCOME FUNDS - 31.9% | ||||||||||||
102 | The Hartford Floating Rate Fund, Class Y | $ | 848 | |||||||||
110 | The Hartford High Yield Fund, Class Y | 739 | ||||||||||
88 | The Hartford Income Fund, Class Y | 838 | ||||||||||
249 | The Hartford Inflation Plus Fund, Class Y | 2,843 | ||||||||||
128 | The Hartford Short Duration Fund, Class Y | 1,232 | ||||||||||
324 | The Hartford Strategic Income Fund, Class Y | 2,813 | ||||||||||
522 | The Hartford Total Return Bond Fund, Class Y | 5,397 | ||||||||||
Total fixed income funds (cost $14,172) | $ | 14,710 | ||||||||||
Total investments in affiliated investment companies (cost $47,120) | $ | 45,300 | ||||||||||
EXCHANGE TRADED FUNDS - 1.7% | ||||||||||||
2 | Powershares Emerging Markets Sovereign Debt Portfolio ETF | $ | 54 | |||||||||
9 | SPDR DJ Wilshire International Real Estate ETF | 303 | ||||||||||
9 | SPDR DJ Wilshire REIT ETF | 413 | ||||||||||
Total exchange traded funds (cost $686) | $ | 770 | ||||||||||
Total long-term investments (cost $47,806) | $ | 46,070 | ||||||||||
SHORT-TERM INVESTMENTS - 0.0% | ||||||||||||
Investment Pools and Funds - 0.0% | ||||||||||||
— | State Street Bank Money Market Fund | $ | — | |||||||||
Total short-term investments (cost $—) | $ | — | ||||||||||
Total investments (cost $47,806) ▲ | 99.8 | % | $ | 46,070 | ||||||||
Other assets and liabilities | 0.2 | % | 104 | |||||||||
Total net assets | 100.0 | % | $ | 46,174 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $48,175 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 1,367 | ||
Unrealized Depreciation | (3,472 | ) | ||
Net Unrealized Depreciation | $ | (2,105 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 45,300 | $ | 45,300 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 770 | 770 | — | — | ||||||||||||
Short-Term Investments | — | — | — | — | ||||||||||||
Total | $ | 46,070 | $ | 46,070 | $ | — | $ | — | ||||||||
5
Assets: | ||||
Investments in securities, at market value (cost $686) | $ | 770 | ||
Investments in underlying affiliated funds, at market value (cost $47,120) | 45,300 | |||
Receivables: | ||||
Fund shares sold | 42 | |||
Dividends and interest | 58 | |||
Other assets | 57 | |||
Total assets | 46,227 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 42 | |||
Fund shares redeemed | — | |||
Investment management fees | 1 | |||
Distribution fees | 1 | |||
Accrued expenses | 9 | |||
Total liabilities | 53 | |||
Net assets | $ | 46,174 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 51,313 | |||
Accumulated undistributed net investment income | 507 | |||
Accumulated net realized loss on investments | (3,910 | ) | ||
Unrealized depreciation of investments | (1,736 | ) | ||
Net assets | $ | 46,174 | ||
Shares authorized | 950,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.89/$9.41 | ||
Shares outstanding | 2,058 | |||
Net assets | $ | 18,297 | ||
Class R3: Net asset value per share | $ | 8.87 | ||
Shares outstanding | 130 | |||
Net assets | $ | 1,151 | ||
Class R4: Net asset value per share | $ | 8.89 | ||
Shares outstanding | 1,968 | |||
Net assets | $ | 17,503 | ||
Class R5: Net asset value per share | $ | 8.90 | ||
Shares outstanding | 1,035 | |||
Net assets | $ | 9,213 | ||
Class Y: Net asset value per share | $ | 8.90 | ||
Shares outstanding | 1 | |||
Net assets | $ | 10 | ||
6
Investment Income: | ||||
Dividends | $ | 28 | ||
Dividends from underlying affiliated funds | 901 | |||
Interest | — | |||
Total investment income | 929 | |||
Expenses: | ||||
Investment management fees | 52 | |||
Administrative services fees | 26 | |||
Transfer agent fees | 18 | |||
Distribution fees | ||||
Class A | 35 | |||
Class B* | 5 | |||
Class C* | 7 | |||
Class R3 | 3 | |||
Class R4 | 30 | |||
Custodian fees | 1 | |||
Accounting services fees | 4 | |||
Registration and filing fees | 62 | |||
Board of Directors’ fees | 3 | |||
Audit fees | 6 | |||
Other expenses | 15 | |||
Total expenses (before waivers) | 267 | |||
Expense waivers | (202 | ) | ||
Transfer agent fee waivers | (1 | ) | ||
Total waivers | (203 | ) | ||
Total expenses, net | 64 | |||
Net Investment Income | 865 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (2,170 | ) | ||
Net Realized Loss on Investments | (2,170 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 8,574 | |||
Net Changes in Unrealized Appreciation of Investments . | 8,574 | |||
Net Gain on Investments | 6,404 | |||
Net Increase in Net Assets Resulting from Operations | $ | 7,269 | ||
* | Classes B and C were merged into Class A on July 24, 2009. Please refer to the Notes to Financial Statements for further details. |
7
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 865 | $ | 536 | ||||
Net realized loss on investments | (2,170 | ) | (1,289 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 8,574 | (11,548 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 7,269 | (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 | 2,780 | † | 2,912 | |||||
Class B* | (856 | )‡ | 209 | |||||
Class C* | (1,134 | )§ | 561 | |||||
Class R3 | 750 | 73 | ||||||
Class R4 | 6,644 | 10,259 | ||||||
Class R5 | 1,682 | 8,615 | ||||||
Class Y | — | 1 | ||||||
Net increase from capital share transactions | 9,866 | 22,630 | ||||||
Net Increase In Net Assets | 16,713 | 9,222 | ||||||
Net Assets: | ||||||||
Beginning of period | 29,461 | 20,239 | ||||||
End of period | $ | 46,174 | $ | 29,461 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 507 | $ | 64 | ||||
* | Classes B and C were merged into Class A on July 24, 2009. Please refer to the Notes to Financial Statements for further details. | |
† | Includes merger activity in the amount of $1,723. | |
‡ | Includes merger activity in the amount of $(712). | |
§ | Includes merger activity in the amount of $(1,011). |
8
1. | Organization: |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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%. 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. |
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 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 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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. | ||
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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 |
9
Notes to Financial Statements – (continued)
October 31, 2009
(000’s Omitted)
restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. 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 Valuation Time. 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 are 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. |
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. |
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. |
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 may use 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 October 31, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. |
10
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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) – Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
11
c) | Distributions and Components of Distributable Earnings – 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 422 | $ | 1,016 | ||||
Long-Term Capital Gains * | — | 91 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 507 | ||
Accumulated Capital Losses * | (3,541 | ) | ||
Unrealized Depreciation † | (2,105 | ) | ||
Total Accumulated Deficit | $ | (5,139 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts – The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. | ||
e) | Capital Loss Carryforward – At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 1,515 | ||
2017 | 2,026 | |||
Total | $ | 3,541 | ||
f) | Accounting for Uncertainty in Income Taxes – Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 |
12
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 year ended October 31, 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 services 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 year ended October 31, 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 R3 | Class R4 | Class R5 | Class Y | ||||
1.05% | 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, 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $62 and contingent deferred sales charges of $2 from the Fund. |
The Fund has adopted a Distribution and Service Plan 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, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Fund 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 up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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 year ended October 31, 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. |
13
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $17 for providing such services. These fees are accrued daily and paid monthly. |
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class Y | 1 |
6. | Investment Transactions: |
For the year ended October 31, 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 | $ | 17,350 | ||
Sales Proceeds Excluding U.S. Government Obligations | 7,049 |
7. | Capital Share Transactions: |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 525 | 26 | (483 | ) | 206 | 274 | 689 | 78 | (499 | ) | — | 268 | ||||||||||||||||||||||||||||
Amount | $ | 4,451 | $ | 184 | $ | (3,578 | ) | $ | 1,723 | $ | 2,780 | $ | 7,073 | $ | 834 | $ | (4,995 | ) | $ | — | $ | 2,912 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 17 | 1 | (12 | ) | (86 | ) | (80 | ) | 50 | 3 | (34 | ) | — | 19 | ||||||||||||||||||||||||||
Amount | $ | 114 | $ | 8 | $ | (266 | ) | $ | (712 | ) | $ | (856 | ) | $ | 511 | $ | 29 | $ | (331 | ) | $ | — | $ | 209 | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 39 | 2 | (30 | ) | (122 | ) | (111 | ) | 73 | 2 | (20 | ) | — | 55 | ||||||||||||||||||||||||||
Amount | $ | 278 | $ | 12 | $ | (413 | ) | $ | (1,011 | ) | $ | (1,134 | ) | $ | 708 | $ | 26 | $ | (173 | ) | $ | — | $ | 561 | ||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 308 | — | (187 | ) | — | 121 | 8 | — | — | — | 8 | |||||||||||||||||||||||||||||
Amount | $ | 2,361 | $ | 1 | $ | (1,612 | ) | $ | — | $ | 750 | $ | 72 | $ | 1 | $ | — | $ | — | $ | 73 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 993 | 18 | (140 | ) | — | 871 | 1,212 | 14 | (226 | ) | — | 1,000 | ||||||||||||||||||||||||||||
Amount | $ | 7,548 | $ | 124 | $ | (1,028 | ) | $ | — | $ | 6,644 | $ | 12,434 | $ | 137 | $ | (2,312 | ) | $ | — | $ | 10,259 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 365 | 13 | (158 | ) | — | 220 | 964 | 8 | (158 | ) | — | 814 | ||||||||||||||||||||||||||||
Amount | $ | 2,758 | $ | 92 | $ | (1,168 | ) | $ | — | $ | 1,682 | $ | 10,004 | $ | 76 | $ | (1,465 | ) | $ | — | $ | 8,615 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | — | $ | 1 |
14
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 8 | $ | 52 | |||||
For the Year Ended October 31, 2008 | 2 | $ | 20 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. |
9. | Class Mergers: |
At a Special Meeting of Shareholders held on July 16, 2009, the shareholders of the Fund approved the reclassification of Class B shares and Class C shares as Class A shares of the Fund. |
Effective with the close of business on July 24, 2009, Classes B and C were merged into Class A. The mergers were accomplished by tax-free exchanges as detailed below: |
Class A | Class B | Class C | ||||||||||
Shares exchanged | N/A | 86 | 122 | |||||||||
Shares issued — to Class B shareholders | 85 | N/A | N/A | |||||||||
Shares issued — to Class C shareholders | 121 | N/A | N/A | |||||||||
Net assets immediately before merger | $ | 14,775 | $ | 712 | $ | 1,011 | ||||||
Net assets immediately after merger | $ | 16,498 | N/A | N/A |
10. | Subsequent Events: |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A(e) | $ | 7.56 | $ | 0.19 | $ | — | $ | 1.25 | $ | 1.44 | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | 1.33 | $ | 8.89 | ||||||||||||||||||||
R3 | 7.55 | 0.17 | — | 1.25 | 1.42 | (0.10 | ) | — | — | (0.10 | ) | 1.32 | 8.87 | |||||||||||||||||||||||||||||||
R4 | 7.55 | 0.19 | — | 1.26 | 1.45 | (0.11 | ) | — | — | (0.11 | ) | 1.34 | 8.89 | |||||||||||||||||||||||||||||||
R5 | 7.56 | 0.20 | — | 1.25 | 1.45 | (0.11 | ) | — | — | (0.11 | ) | 1.34 | 8.90 | |||||||||||||||||||||||||||||||
Y | 7.56 | 0.21 | — | 1.24 | 1.45 | (0.11 | ) | — | — | (0.11 | ) | 1.34 | 8.90 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
R3 | 11.67 | 0.35 | — | (3.99 | ) | (3.64 | ) | (0.39 | ) | (0.09 | ) | — | (0.48 | ) | (4.12 | ) | 7.55 | |||||||||||||||||||||||||||
R4 | 11.67 | 0.37 | — | (3.98 | ) | (3.61 | ) | (0.42 | ) | (0.09 | ) | — | (0.51 | ) | (4.12 | ) | 7.55 | |||||||||||||||||||||||||||
R5 | 11.68 | 0.39 | — | (3.97 | ) | (3.58 | ) | (0.45 | ) | (0.09 | ) | — | (0.54 | ) | (4.12 | ) | 7.56 | |||||||||||||||||||||||||||
Y | 11.68 | 0.29 | — | (3.86 | ) | (3.57 | ) | (0.46 | ) | (0.09 | ) | — | (0.55 | ) | (4.12 | ) | 7.56 | |||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
R3(f) | 10.55 | 0.08 | — | 1.11 | 1.19 | (0.07 | ) | — | — | (0.07 | ) | 1.12 | 11.67 | |||||||||||||||||||||||||||||||
R4(f) | 10.55 | 0.10 | — | 1.12 | 1.22 | (0.10 | ) | — | — | (0.10 | ) | 1.12 | 11.67 | |||||||||||||||||||||||||||||||
R5(f) | 10.55 | 0.14 | — | 1.11 | 1.25 | (0.12 | ) | — | — | (0.12 | ) | 1.13 | 11.68 | |||||||||||||||||||||||||||||||
Y | 10.43 | 0.30 | — | 1.25 | 1.55 | (0.26 | ) | (0.04 | ) | — | (0.30 | ) | 1.25 | 11.68 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 (i) | ||||||||||||||||||||||||||||||||||||||||||||
A | 9.79 | 0.13 | — | 0.86 | 0.99 | (0.35 | ) | — | — | (0.35 | ) | 0.64 | 10.43 | |||||||||||||||||||||||||||||||
Y | 9.79 | 0.27 | — | 0.75 | 1.02 | (0.38 | ) | — | — | (0.38 | ) | 0.64 | 10.43 | |||||||||||||||||||||||||||||||
From (commencement of operations) September 30, 2005, through October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A(j) | 10.00 | 0.01 | — | (0.22 | ) | (0.21 | ) | — | — | — | — | (0.21 | ) | 9.79 | ||||||||||||||||||||||||||||||
Y(j) | 10.00 | 0.01 | — | (0.22 | ) | (0.21 | ) | — | — | — | — | (0.21 | ) | 9.79 |
(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) | Classes B and C were merged into Class A on July 24, 2009 (See Class Mergers in the accompanying Notes to Financial Statements). | |
(f) | Commenced operations on December 22, 2006. | |
(g) | Not annualized. | |
(h) | Annualized. | |
(i) | Per share amounts have been calculated using average shares outstanding method. | |
(j) | Commenced operations on September 30, 2005. |
16
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net | |||||||||||||||||||||||
Net Assets at End | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio | |||||||||||||||||||||
Total Return(b) | of Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Turnover Rate(d) | ||||||||||||||||||||
19.38 | % | $ | 18,297 | 0.75 | % | 0.25 | % | 0.25 | % | 2.52 | % | 20 | % | |||||||||||||
19.19 | 1,151 | 1.19 | 0.40 | 0.40 | 1.57 | — | ||||||||||||||||||||
19.53 | 17,503 | 0.81 | 0.10 | 0.10 | 2.48 | — | ||||||||||||||||||||
19.59 | 9,213 | 0.51 | 0.05 | 0.05 | 2.63 | — | ||||||||||||||||||||
19.63 | 10 | 0.42 | 0.05 | 0.05 | 2.69 | — | ||||||||||||||||||||
(32.13 | ) | 13,495 | 0.77 | 0.48 | 0.48 | 2.30 | 51 | |||||||||||||||||||
(32.37 | ) | 70 | 1.21 | 0.91 | 0.91 | 1.00 | — | |||||||||||||||||||
(32.18 | ) | 8,281 | 0.83 | 0.55 | 0.55 | 1.12 | — | |||||||||||||||||||
(31.98 | ) | 6,165 | 0.53 | 0.23 | 0.23 | 0.96 | — | |||||||||||||||||||
(31.89 | ) | 9 | 0.46 | 0.17 | 0.17 | 2.74 | — | |||||||||||||||||||
14.95 | 17,710 | 1.25 | 0.51 | 0.51 | 1.64 | 16 | ||||||||||||||||||||
11.32 | (g) | 11 | 1.72 | (h) | 0.91 | (h) | 0.91 | (h) | 0.86 | (h) | — | |||||||||||||||
11.64 | (g) | 1,129 | 1.35 | (h) | 0.61 | (h) | 0.61 | (h) | 1.23 | (h) | — | |||||||||||||||
11.91 | (g) | 11 | 1.12 | (h) | 0.31 | (h) | 0.31 | (h) | 1.46 | (h) | — | |||||||||||||||
15.20 | 12 | 0.94 | 0.21 | 0.21 | 2.71 | — | ||||||||||||||||||||
10.37 | 2,125 | 9.85 | 0.53 | 0.53 | 1.35 | 19 | ||||||||||||||||||||
10.70 | 11 | 9.41 | 0.22 | 0.22 | 2.73 | — | ||||||||||||||||||||
(2.10 | ) (g) | 144 | 0.66 | (h) | 0.51 | (h) | 0.51 | (h) | 2.77 | (h) | 28 | |||||||||||||||
(2.10 | ) (g) | 10 | 0.29 | (h) | 0.20 | (h) | 0.20 | (h) | 1.91 | (h) | — |
17
December 15, 2009
18
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
19
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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. |
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 – 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 – 2009. |
20
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
21
U.S. Treasury* | 5.00 | % | ||
Other Direct Federal Obligations* | 1.00 | % | ||
Other Securities | 94.00 | % | ||
Total | 100.00 | % | ||
DRD† | 90.00 | % | ||
QDI‡ | 95.00 | % | ||
QII§ | 100.00 | % |
* | The income received from federal obligations. | |
† | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
‡ | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. | |
§ | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.107 | N/A | N/A | 0.107 | ||||||||||||
Class B | 0.094 | N/A | N/A | 0.094 | ||||||||||||
Class C | 0.094 | N/A | N/A | 0.094 | ||||||||||||
Class R3 | 0.101 | N/A | N/A | 0.101 | ||||||||||||
Class R4 | 0.106 | N/A | N/A | 0.106 | ||||||||||||
Class R5 | 0.111 | N/A | N/A | 0.111 | ||||||||||||
Class Y | 0.114 | N/A | N/A | 0.114 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,193.30 | $ | 1.38 | $ | 1,000.00 | $ | 1,023.95 | $ | 1.28 | 0.25 | % | 184 | 365 | |||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,193.80 | $ | 2.21 | $ | 1,000.00 | $ | 1,023.19 | $ | 2.04 | 0.40 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,194.90 | $ | 0.55 | $ | 1,000.00 | $ | 1,024.70 | $ | 0.51 | 0.10 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,194.60 | $ | 0.28 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,194.60 | $ | 0.28 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | 184 | 365 |
23
Fund Name | For | Against | Abstain | |||||||||
The Hartford Target Retirement 2020 Fund – Class B shares | 48,040.56 | 0 | 0 |
Fund Name | For | Against | Abstain | |||||||||
The Hartford Target Retirement 2020 Fund – Class C shares | 72,568.01 | 0 | 2,002.29 |
24
25
26
27
28
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Target Retirement 2025 Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks to maximize total return and | |
secondarily, to seek capital preservation. |
Growth of a $10,000 investment in Class R3
1 | Since | |||||||
Year | Inception | |||||||
Target Retirement 2025 R3 | 17.44 | % | 17.44 | % | ||||
Target Retirement 2025 R4 | 17.81 | % | 17.81 | % | ||||
Target Retirement 2025 R5 | 17.92 | % | 17.92 | % | ||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 13.79 | % | ||||
S&P 500 Index | 9.78 | % | 9.78 | % |
(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 10/31/09, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 1.3 | % | ||
SPDR DJ Wilshire REIT ETF | 1.0 | |||
The Hartford Capital Appreciation Fund, Class Y | 12.4 | |||
The Hartford Capital Appreciation II Fund, Class Y | 1.8 | |||
The Hartford Dividend and Growth Fund, Class Y | 6.0 | |||
The Hartford Equity Income Fund, Class Y | 3.0 | |||
The Hartford Fundamental Growth Fund, Class Y | 4.5 | |||
The Hartford Global Equity Fund, Class Y | 2.4 | |||
The Hartford Global Growth Fund, Class Y | 2.0 | |||
The Hartford Growth Fund, Class Y | 2.5 | |||
The Hartford Growth Opportunities Fund, Class Y | 1.6 | |||
The Hartford Inflation Plus Fund, Class Y | 6.6 | |||
The Hartford International Opportunities Fund, Class Y | 4.6 | |||
The Hartford International Small Company Fund, Class Y | 6.7 | |||
The Hartford MidCap Fund, Class Y | 2.0 | |||
The Hartford MidCap Growth Fund, Class Y | 0.9 | |||
The Hartford MidCap Value Fund, Class Y | 1.3 | |||
The Hartford Select MidCap Value Fund, Class Y | 2.1 | |||
The Hartford Select SmallCap Value Fund, Class Y | 2.3 | |||
The Hartford Short Duration Fund, Class Y | 4.4 | |||
The Hartford Small Company Fund, Class Y | 2.6 | |||
The Hartford SmallCap Growth Fund, Class Y | 1.3 | |||
The Hartford Total Return Bond Fund, Class Y | 12.7 | |||
The Hartford Value Fund, Class Y | 12.2 | |||
The Hartford Value Opportunities Fund, Class Y | 1.3 | |||
Other Assets and Liabilities | 0.5 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 97.2% | ||||||||||||
EQUITY FUNDS - 73.5% | ||||||||||||
23 | The Hartford Capital Appreciation Fund, Class Y | $ | 682 | |||||||||
9 | The Hartford Capital Appreciation II Fund, Class Y● | 98 | ||||||||||
20 | The Hartford Dividend and Growth Fund, Class Y | 330 | ||||||||||
15 | The Hartford Equity Income Fund, Class Y | 166 | ||||||||||
26 | The Hartford Fundamental Growth Fund, Class Y● | 248 | ||||||||||
16 | The Hartford Global Equity Fund, Class Y | 131 | ||||||||||
8 | The Hartford Global Growth Fund, Class Y● | 110 | ||||||||||
9 | The Hartford Growth Fund, Class Y● | 134 | ||||||||||
4 | The Hartford Growth Opportunities Fund, Class Y● | 85 | ||||||||||
19 | The Hartford International Opportunities Fund, Class Y | 252 | ||||||||||
34 | The Hartford International Small Company Fund, Class Y | 366 | ||||||||||
6 | The Hartford MidCap Fund, Class Y● | 108 | ||||||||||
7 | The Hartford MidCap Growth Fund, Class Y● | 51 | ||||||||||
8 | The Hartford MidCap Value Fund, Class Y | 68 | ||||||||||
15 | The Hartford Select MidCap Value Fund, Class Y | 117 | ||||||||||
16 | The Hartford Select SmallCap Value Fund, Class Y | 128 | ||||||||||
10 | The Hartford Small Company Fund, Class Y● | 143 | ||||||||||
3 | The Hartford SmallCap Growth Fund, Class Y● | 73 | ||||||||||
70 | The Hartford Value Fund, Class Y | 670 | ||||||||||
7 | The Hartford Value Opportunities Fund, Class Y | 69 | ||||||||||
Total equity funds (cost $3,565) | $ | 4,029 | ||||||||||
FIXED INCOME FUNDS - 23.7% | ||||||||||||
32 | The Hartford Inflation Plus Fund, Class Y | $ | 363 | |||||||||
25 | The Hartford Short Duration Fund, Class Y | 243 | ||||||||||
67 | The Hartford Total Return Bond Fund, Class Y | 696 | ||||||||||
Total fixed income funds (cost $1,221) | $ | 1,302 | ||||||||||
Total investments in affiliated investment companies (cost $4,786) | $ | 5,331 | ||||||||||
EXCHANGE TRADED FUNDS - 2.3% | ||||||||||||
2 | SPDR DJ Wilshire International Real Estate ETF | $ | 72 | |||||||||
1 | SPDR DJ Wilshire REIT ETF | 55 | ||||||||||
Total exchange traded funds (cost $113) | $ | 127 | ||||||||||
Total long-term investments (cost $4,899) | $ | 5,458 | ||||||||||
Total investments (cost $4,899) ▲ | 99.5 | % | $ | 5,458 | ||||||||
Other assets and liabilities | 0.5 | % | 29 | |||||||||
Total net assets | 100.0 | % | $ | 5,487 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $4,900 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 559 | ||
Unrealized Depreciation | (1 | ) | ||
Net Unrealized Appreciation | $ | 558 | ||
● | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 5,331 | $ | 5,331 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 127 | 127 | — | — | ||||||||||||
Total | $ | 5,458 | $ | 5,458 | $ | — | $ | — | ||||||||
5
Assets: | ||||
Investments in securities, at market value (cost $113) | $ | 127 | ||
Investments in underlying affiliated funds, at market value (cost $4,786) | 5,331 | |||
Receivables: | ||||
Fund shares sold | 1 | |||
Dividends and interest | 3 | |||
Other assets | 32 | |||
Total assets | 5,494 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 1 | |||
Fund shares redeemed | — | |||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 6 | |||
Total liabilities | 7 | |||
Net assets | $ | 5,487 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 4,924 | |||
Accumulated undistributed net investment income | 30 | |||
Accumulated net realized loss on investments | (26 | ) | ||
Unrealized appreciation of investments | 559 | |||
Net assets | $ | 5,487 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 11.60 | ||
Shares outstanding | 176 | |||
Net assets | $ | 2,046 | ||
Class R4: Net asset value per share | $ | 11.63 | ||
Shares outstanding | 177 | |||
Net assets | $ | 2,060 | ||
Class R5: Net asset value per share | $ | 11.64 | ||
Shares outstanding | 119 | |||
Net assets | $ | 1,381 | ||
6
Investment Income: | ||||
Dividends | $ | 5 | ||
Dividends from underlying affiliated funds | 67 | |||
Interest | — | |||
Total investment income | 72 | |||
Expenses: | ||||
Investment management fees | 5 | |||
Administrative services fees | 5 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 6 | |||
Class R4 | 3 | |||
Custodian fees | 1 | |||
Accounting services fees | — | |||
Registration and filing fees | 37 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 5 | |||
Other expenses | 3 | |||
Total expenses (before waivers) | 66 | |||
Expense waivers | (59 | ) | ||
Total waivers | (59 | ) | ||
Total expenses, net | 7 | |||
Net Investment Income | 65 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (26 | ) | ||
Net realized gain on investments in securities | — | |||
Net Realized Loss on Investments | (26 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 559 | |||
Net Changes in Unrealized Appreciation of Investments | 559 | |||
Net Gain on Investments | 533 | |||
Net Increase in Net Assets Resulting from Operations | $ | 598 | ||
7
For the | ||||||||
For the | One-Day | |||||||
Year Ended | Period Ended | |||||||
October 31, 2009 | October 31, 2008* | |||||||
Operations: | ||||||||
Net investment income | $ | 65 | $ | — | ||||
Net realized loss on investments | (26 | ) | — | |||||
Net unrealized appreciation of investments | 559 | — | ||||||
Net Increase In Net Assets Resulting From Operations | 598 | — | ||||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class R3 | (11 | ) | — | |||||
Class R4 | (12 | ) | — | |||||
Class R5 | (12 | ) | — | |||||
Total distributions | (35 | ) | — | |||||
Capital Share Transactions: | ||||||||
Class R3 | 861 | 1,000 | ||||||
Class R4 | 856 | 1,000 | ||||||
Class R5 | 207 | 1,000 | ||||||
Net increase from capital share transactions | 1,924 | 3,000 | ||||||
Net Increase In Net Assets | 2,487 | 3,000 | ||||||
Net Assets: | ||||||||
Beginning of period | 3,000 | — | ||||||
End of period | $ | 5,487 | $ | 3,000 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 30 | $ | — | ||||
* | Commencement of operations. |
8
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 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 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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. | ||
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
closings. 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 Valuation Time. 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 are 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may use 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 October 31, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. |
10
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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) - Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
11
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings - 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, 2009 | ||||
Ordinary Income | $ | 35 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 30 | ||
Accumulated Capital Losses * | (25 | ) | ||
Unrealized Appreciation † | 558 | |||
Total Accumulated Earnings | $ | 563 | ||
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts - The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. | ||
e) | Capital Loss Carryforward - At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2017 | $ | 25 | ||
Total | $ | 25 | ||
f) | Accounting for Uncertainty in Income Taxes - Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
12
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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 a Distribution and Service Plan 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. | |||
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated in an amount that rounds to zero for providing such services. These fees are accrued daily and paid monthly. |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of October 31, 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 year ended October 31, 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 | $ | 5,303 | ||
Sales Proceeds Excluding U.S. Government Obligations | 378 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and for the one-day period ended October 31, 2008: |
For the Year Ended October 31, 2009 | For the One-Day Period 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 R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 77 | 1 | (2 | ) | — | 76 | 100 | — | — | — | 100 | |||||||||||||||||||||||||||||
Amount | $ | 867 | $ | 11 | $ | (17 | ) | $ | — | $ | 861 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 79 | 1 | (3 | ) | — | 77 | 100 | — | — | — | 100 | |||||||||||||||||||||||||||||
Amount | $ | 878 | $ | 12 | $ | (34 | ) | $ | — | $ | 856 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | |||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 18 | 1 | — | — | 19 | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | 195 | $ | 12 | $ | — | $ | — | $ | 207 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
14
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008 through October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.16 | $ | — | $ | 1.56 | $ | 1.72 | $ | (0.12 | ) | $ | — | $ | — | $ | (0.12 | ) | $ | 1.60 | $ | 11.60 | ||||||||||||||||||||
R4 | 10.00 | 0.18 | — | 1.57 | 1.75 | (0.12 | ) | — | — | (0.12 | ) | 1.63 | 11.63 | |||||||||||||||||||||||||||||||
R5 | 10.00 | 0.20 | — | 1.56 | 1.76 | (0.12 | ) | — | — | (0.12 | ) | 1.64 | 11.64 |
(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 and the complete redemption of the investment at net asset value at the end of each period. | |
(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. |
16
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||
Net Assets at | Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net | ||||||||
End of Period | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio Turnover | |||||||
Total Return(b) | (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Rate(d) | ||||||
17.44% | $2,046 | 2.25% | 0.42% | 0.42% | 1.73% | 12% | ||||||
17.81 | 2,060 | 1.94 | 0.12 | 0.12 | 1.99 | — | ||||||
17.92 | 1,381 | 1.71 | 0.07 | 0.07 | 2.09 | — |
17
December 15, 2009
18
19
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 - - 2009). |
20
21
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class R3 | 0.115 | N/A | N/A | 0.115 | ||||||||||||
Class R4 | 0.120 | N/A | N/A | 0.120 | ||||||||||||
Class R5 | 0.120 | N/A | N/A | 0.120 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,189.70 | $ | 2.32 | $ | 1,000.00 | $ | 1,023.09 | $ | 2.14 | 0.42 | % | 184 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,192.80 | $ | 0.66 | $ | 1,000.00 | $ | 1,024.60 | $ | 0.61 | 0.12 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,192.60 | $ | 0.39 | $ | 1,000.00 | $ | 1,024.85 | $ | 0.36 | 0.07 | 184 | 365 |
23
24
25
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
26
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 | ||||
25 |
(subadvised by Hartford Investment Management Company) | Investment objective – Seeks to maximize total return and secondarily, to seek capital preservation. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | Since | |||||||
Year | Inception | |||||||
Target Retirement 2030 A# | 17.62 | % | -0.71 | % | ||||
Target Retirement 2030 A## | 11.15 | % | -2.07 | % | ||||
Target Retirement 2030 R3# | 17.37 | % | -0.87 | % | ||||
Target Retirement 2030 R4# | 17.83 | % | -0.62 | % | ||||
Target Retirement 2030 R5# | 17.68 | % | -0.55 | % | ||||
Target Retirement 2030 Y# | 17.83 | % | -0.43 | % | ||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 5.72 | % | ||||
S&P 500 Index | 9.78 | % | -2.03 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Classes R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(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 10/31/09, which excludes investment transactions as of this date. | |
(4) | The initial investment in Class A shares reflects the maximum sales charge. |
Portfolio Managers | |||
Hugh Whelan, CFA | Edward C. Caputo, CFA | ||
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 1.0 | % | ||
SPDR DJ Wilshire REIT ETF | 1.0 | |||
The Hartford Capital Appreciation Fund, Class Y | 12.8 | |||
The Hartford Capital Appreciation II Fund, Class Y | 2.5 | |||
The Hartford Disciplined Equity Fund, Class Y | 4.2 | |||
The Hartford Dividend and Growth Fund, Class Y | 3.7 | |||
The Hartford Equity Income Fund, Class Y | 2.5 | |||
The Hartford Fundamental Growth Fund, Class Y | 1.0 | |||
The Hartford Global Equity Fund, Class Y | 1.0 | |||
The Hartford Global Growth Fund, Class Y | 2.6 | |||
The Hartford Growth Fund, Class Y | 3.8 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.5 | |||
The Hartford Inflation Plus Fund, Class Y | 5.4 | |||
The Hartford International Opportunities Fund, Class Y | 7.3 | |||
The Hartford International Small Company Fund, Class Y | 4.3 | |||
The Hartford MidCap Fund, Class Y | 1.4 | |||
The Hartford MidCap Growth Fund, Class Y | 0.9 | |||
The Hartford MidCap Value Fund, Class Y | 0.9 | |||
The Hartford Select MidCap Value Fund, Class Y | 1.0 | |||
The Hartford Select SmallCap Value Fund, Class Y | 4.1 | |||
The Hartford Short Duration Fund, Class Y | 0.5 | |||
The Hartford Small Company Fund, Class Y | 2.3 | |||
The Hartford SmallCap Growth Fund, Class Y | 0.9 | |||
The Hartford Total Return Bond Fund, Class Y | 13.3 | |||
The Hartford Value Fund, Class Y | 17.2 | |||
The Hartford Value Opportunities Fund, Class Y | 1.7 | |||
Other Assets and Liabilities | 0.2 | |||
Total | 100.0 | % | ||
3
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 97.8% | ||||||||||||
EQUITY FUNDS - 78.6% | ||||||||||||
196 | The Hartford Capital Appreciation Fund, Class Y | $ | 5,936 | |||||||||
108 | The Hartford Capital Appreciation II Fund, Class Y• | 1,180 | ||||||||||
182 | The Hartford Disciplined Equity Fund, Class Y | 1,954 | ||||||||||
106 | The Hartford Dividend and Growth Fund, Class Y | 1,718 | ||||||||||
105 | The Hartford Equity Income Fund, Class Y | 1,140 | ||||||||||
48 | The Hartford Fundamental Growth Fund, Class Y• | 452 | ||||||||||
57 | The Hartford Global Equity Fund, Class Y | 460 | ||||||||||
90 | The Hartford Global Growth Fund, Class Y• | 1,195 | ||||||||||
125 | The Hartford Growth Fund, Class Y• | 1,764 | ||||||||||
54 | The Hartford Growth Opportunities Fund, Class Y• | 1,168 | ||||||||||
258 | The Hartford International Opportunities Fund, Class Y | 3,369 | ||||||||||
185 | The Hartford International Small Company Fund, Class Y | 2,010 | ||||||||||
36 | The Hartford MidCap Fund, Class Y• | 628 | ||||||||||
53 | The Hartford MidCap Growth Fund, Class Y• | 401 | ||||||||||
46 | The Hartford MidCap Value Fund, Class Y | 405 | ||||||||||
63 | The Hartford Select MidCap Value Fund, Class Y | 482 | ||||||||||
238 | The Hartford Select SmallCap Value Fund, Class Y | 1,893 | ||||||||||
72 | The Hartford Small Company Fund, Class Y• | 1,075 | ||||||||||
21 | The Hartford SmallCap Growth Fund, Class Y• | 440 | ||||||||||
837 | The Hartford Value Fund, Class Y | 7,989 | ||||||||||
74 | The Hartford Value Opportunities Fund, Class Y | 777 | ||||||||||
Total equity funds (cost $38,998) | $ | 36,436 | ||||||||||
FIXED INCOME FUNDS - 19.2% | ||||||||||||
219 | The Hartford Inflation Plus Fund, Class Y | $ | 2,502 | |||||||||
24 | The Hartford Short Duration Fund, Class Y | 232 | ||||||||||
595 | The Hartford Total Return Bond Fund, Class Y | 6,149 | ||||||||||
Total fixed income funds (cost $8,539) | $ | 8,883 | ||||||||||
Total investments in affiliated investment companies (cost $47,537) | $ | 45,319 | ||||||||||
EXCHANGE TRADED FUNDS - 2.0% | ||||||||||||
14 | SPDR DJ Wilshire International Real Estate ETF | $ | 466 | |||||||||
11 | SPDR DJ Wilshire REIT ETF | 480 | ||||||||||
Total exchange traded funds (cost $949) | $ | 946 | ||||||||||
Total long-term investments (cost $48,486) | $ | 46,265 | ||||||||||
Total investments (cost $48,486) ▲ | 99.8 | % | $ | 46,265 | ||||||||
Other assets and liabilities | 0.2 | % | 85 | |||||||||
Total net assets | 100.0 | % | $ | 46,350 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $48,823 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 1,198 | ||
Unrealized Depreciation | (3,756 | ) | ||
Net Unrealized Depreciation | $ | (2,558 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 45,319 | $ | 45,319 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 946 | 946 | — | — | ||||||||||||
Total | $ | 46,265 | $ | 46,265 | $ | — | $ | — | ||||||||
5
Assets: | ||||
Investments in securities, at market value (cost $949) | $ | 946 | ||
Investments in underlying affiliated funds, at market value (cost $47,537) | 45,319 | |||
Receivables: | ||||
Fund shares sold | 74 | |||
Dividends and interest | 26 | |||
Other assets | 71 | |||
Total assets | 46,436 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 69 | |||
Fund shares redeemed | 4 | |||
Investment management fees | 1 | |||
Distribution fees | 2 | |||
Accrued expenses | 10 | |||
Total liabilities | 86 | |||
Net assets | $ | 46,350 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 50,250 | |||
Accumulated undistributed net investment income | 287 | |||
Accumulated net realized loss on investments | (1,966 | ) | ||
Unrealized depreciation of investments | (2,221 | ) | ||
Net assets | $ | 46,350 | ||
Shares authorized | 950,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.84/$8.30 | ||
Shares outstanding | 2,181 | |||
Net assets | $ | 17,090 | ||
Class R3: Net asset value per share | $ | 7.77 | ||
Shares outstanding | 413 | |||
Net assets | $ | 3,209 | ||
Class R4: Net asset value per share | $ | 7.83 | ||
Shares outstanding | 2,547 | |||
Net assets | $ | 19,940 | ||
Class R5: Net asset value per share | $ | 7.84 | ||
Shares outstanding | 776 | |||
Net assets | $ | 6,082 | ||
Class Y: Net asset value per share | $ | 7.86 | ||
Shares outstanding | 4 | |||
Net assets | $ | 29 | ||
6
Investment Income: | ||||
Dividends | $ | 34 | ||
Dividends from underlying affiliated funds | 626 | |||
Interest | — | |||
Total investment income | 660 | |||
Expenses: | ||||
Investment management fees | 50 | |||
Administrative services fees | 27 | |||
Transfer agent fees | 24 | |||
Distribution fees | ||||
Class A | 34 | |||
Class B* | 5 | |||
Class C* | 6 | |||
Class R3 | 9 | |||
Class R4 | 32 | |||
Custodian fees | 1 | |||
Accounting services fees | 4 | |||
Registration and filing fees | 62 | |||
Board of Directors’ fees | 3 | |||
Audit fees | 6 | |||
Other expenses | 14 | |||
Total expenses (before waivers) | 277 | |||
Expense waivers | (214 | ) | ||
Transfer agent fee waivers | (2 | ) | ||
Total waivers | (216 | ) | ||
Total expenses, net | 61 | |||
Net Investment Income | 599 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (1,425 | ) | ||
Net Realized Loss on Investments | (1,425 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 7,568 | |||
Net Changes in Unrealized Appreciation of Investments | 7,568 | |||
Net Gain on Investments | 6,143 | |||
Net Increase in Net Assets Resulting from Operations | $ | 6,742 | ||
* | Classes B and C were merged into Class A on July 24, 2009. Please refer to the Notes to Financial Statements for further details. |
7
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 599 | $ | 238 | ||||
Net realized loss on investments | (1,425 | ) | (69 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 7,568 | (11,227 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 6,742 | (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 | (156 | ) | (34 | ) | ||||
Class R5 | (60 | ) | — | |||||
Class Y | (1 | ) | (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 | 2,759 | † | 4,442 | |||||
Class B* | (844 | )‡ | 392 | |||||
Class C* | (1,085 | )§ | 727 | |||||
Class R3 | 1,660 | 1,285 | ||||||
Class R4 | 9,657 | 9,923 | ||||||
Class R5 | 2,680 | 3,411 | ||||||
Class Y | 1 | 2 | ||||||
Net increase from capital share transactions. | 14,828 | 20,182 | ||||||
Net Increase In Net Assets | 21,100 | 8,363 | ||||||
Net Assets: | ||||||||
Beginning of period | 25,250 | 16,887 | ||||||
End of period | $ | 46,350 | $ | 25,250 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 287 | $ | 158 | ||||
* | Classes B and C were merged into Class A on July 24, 2009. Please refer to the Notes to Financial Statements for further details. | |
† | Includes merger activity in the amount of $1,556. | |
‡ | Includes merger activity in the amount of $(740). | |
§ | Includes merger activity in the amount of $(816). |
8
1. | Organization: |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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%. 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. |
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 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 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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. | ||
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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 |
9
Notes to Financial Statements – (continued)
October 31, 2009
(000’s Omitted)
restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. 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 Valuation Time. 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 are 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may use 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 October 31, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. |
10
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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) – Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
11
Notes to Financial Statements – (continued)
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings – 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 470 | $ | 684 | ||||
Long-Term Capital Gains * | — | 77 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 287 | ||
Accumulated Capital Losses * | (1,629 | ) | ||
Unrealized Depreciation † | (2,558 | ) | ||
Total Accumulated Deficit | $ | (3,900 | ) |
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts – The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. | ||
e) | Capital Loss Carryforward – At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 378 | ||
2017 | 1,251 | |||
Total | $ | 1,629 | ||
f) | Accounting for Uncertainty in Income Taxes – Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 |
12
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 year ended October 31, 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 services 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 year ended October 31, 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 R3 | Class R4 | Class R5 | Class Y | ||||
1.05% | 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, 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $76 and contingent deferred sales charges of $1 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Fund 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 up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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 year ended October 31, 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. |
13
Notes to Financial Statements – (continued)
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $21 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class Y | 4 |
6. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 20,267 | ||
Sales Proceeds Excluding U.S. Government Obligations | 5,327 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 653 | 34 | (583 | ) | 211 | 315 | 722 | 67 | (321 | ) | — | 468 | ||||||||||||||||||||||||||||
Amount | $ | 4,830 | $ | 211 | $ | (3,838 | ) | $ | 1,556 | $ | 2,759 | $ | 6,668 | $ | 677 | $ | (2,903 | ) | $ | — | $ | 4,442 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 22 | 1 | (12 | ) | (100 | ) | (89 | ) | 52 | 2 | (13 | ) | — | 41 | ||||||||||||||||||||||||||
Amount | $ | 139 | $ | 9 | $ | (252 | ) | $ | (740 | ) | $ | (844 | ) | $ | 482 | $ | 22 | $ | (112 | ) | $ | — | $ | 392 | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 53 | 2 | (56 | ) | (111 | ) | (112 | ) | 94 | 2 | (21 | ) | — | 75 | ||||||||||||||||||||||||||
Amount | $ | 335 | $ | 11 | $ | (615 | ) | $ | (816 | ) | $ | (1,085 | ) | $ | 883 | $ | 19 | $ | (175 | ) | $ | — | $ | 727 | ||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 363 | 3 | (111 | ) | — | 255 | 158 | — | (1 | ) | — | 157 | ||||||||||||||||||||||||||||
Amount | $ | 2,449 | $ | 22 | $ | (811 | ) | $ | — | $ | 1,660 | $ | 1,297 | $ | — | $ | (12 | ) | $ | — | $ | 1,285 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,457 | 25 | (53 | ) | — | 1,429 | 1,267 | 4 | (212 | ) | — | 1,059 | ||||||||||||||||||||||||||||
Amount | $ | 9,861 | $ | 156 | $ | (360 | ) | $ | — | $ | 9,657 | $ | 11,848 | $ | 41 | $ | (1,966 | ) | $ | — | $ | 9,923 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 452 | 10 | (58 | ) | — | 404 | 401 | — | (30 | ) | — | 371 | ||||||||||||||||||||||||||||
Amount | $ | 3,036 | $ | 60 | $ | (416 | ) | $ | — | $ | 2,680 | $ | 3,674 | $ | 1 | $ | (264 | ) | $ | — | $ | 3,411 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | 1 | — | — | 1 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | $ | — | $ | 2 | $ | — | $ | — | $ | 2 |
14
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 2 | $ | 12 | |||||
For the Year Ended October 31, 2008 | — | $ | — |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Class Mergers: | |
At a Special Meeting of Shareholders held on July 16, 2009, the shareholders of the Fund approved the reclassification of Class B shares and Class C shares as Class A shares of the Fund. | ||
Effective with the close of business on July 24, 2009, Classes B and C were merged into Class A. The mergers were accomplished by tax-free exchanges as detailed below: |
Class A | Class B | Class C | ||||||||||
Shares exchanged | N/A | 100 | 111 | |||||||||
Shares issued — to Class B shareholders | 100 | N/A | N/A | |||||||||
Shares issued — to Class C shareholders | 111 | N/A | N/A | |||||||||
Net assets immediately before merger | $ | 14,579 | $ | 740 | $ | 816 | ||||||
Net assets immediately after merger | $ | 16,135 | N/A | N/A |
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
15
- Selected Per-Share Data (a) - | ||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A(f) | $ | 6.80 | $ | 0.12 | $ | — | $ | 1.04 | $ | 1.16 | $ | (0.12 | ) | $ | — | $ | — | $ | (0.12 | ) | $ | 1.04 | $ | 7.84 | ||||||||||||||||||||
R3 | 6.77 | 0.10 | — | 1.04 | 1.14 | (0.14 | ) | — | — | (0.14 | ) | 1.00 | 7.77 | |||||||||||||||||||||||||||||||
R4 | 6.78 | 0.12 | — | 1.05 | 1.17 | (0.12 | ) | — | — | (0.12 | ) | 1.05 | 7.83 | |||||||||||||||||||||||||||||||
R5 | 6.80 | 0.13 | — | 1.04 | 1.17 | (0.13 | ) | — | — | (0.13 | ) | 1.04 | 7.84 | |||||||||||||||||||||||||||||||
Y | 6.82 | 0.14 | — | 1.04 | 1.18 | (0.14 | ) | — | — | (0.14 | ) | 1.04 | 7.86 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
R3 | 10.88 | (0.01 | ) | — | (3.68 | ) | (3.69 | ) | (0.32 | ) | (0.10 | ) | — | (0.42 | ) | (4.11 | ) | 6.77 | ||||||||||||||||||||||||||
R4 | 10.91 | 0.02 | — | (3.67 | ) | (3.65 | ) | (0.38 | ) | (0.10 | ) | — | (0.48 | ) | (4.13 | ) | 6.78 | |||||||||||||||||||||||||||
R5 | 10.93 | 0.03 | — | (3.68 | ) | (3.65 | ) | (0.38 | ) | (0.10 | ) | — | (0.48 | ) | (4.13 | ) | 6.80 | |||||||||||||||||||||||||||
Y | 10.95 | 0.18 | — | (3.82 | ) | (3.64 | ) | (0.39 | ) | (0.10 | ) | — | (0.49 | ) | (4.13 | ) | 6.82 | |||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
R3(g) | 9.53 | (0.01 | ) | — | 1.36 | 1.35 | — | — | — | — | 1.35 | 10.88 | ||||||||||||||||||||||||||||||||
R4(g) | 9.53 | — | — | 1.38 | 1.38 | — | — | — | — | 1.38 | 10.91 | |||||||||||||||||||||||||||||||||
R5(g) | 9.53 | 0.05 | — | 1.35 | 1.40 | — | — | — | — | 1.40 | 10.93 | |||||||||||||||||||||||||||||||||
Y | 9.36 | 0.19 | — | 1.54 | 1.73 | (0.13 | ) | (0.01 | ) | — | (0.14 | ) | 1.59 | 10.95 | ||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||
Y | 9.75 | 0.10 | — | 0.84 | 0.94 | (0.53 | ) | — | (0.80 | ) | (1.33 | ) | (0.39 | ) | 9.36 | |||||||||||||||||||||||||||||
From (commencement of operations) September 30, 2005, through October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A(j) | 10.00 | 0.01 | — | (0.26 | ) | (0.25 | ) | — | — | — | — | (0.25 | ) | 9.75 | ||||||||||||||||||||||||||||||
Y(j) | 10.00 | 0.01 | — | (0.26 | ) | (0.25 | ) | — | — | — | — | (0.25 | ) | 9.75 |
(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) | Classes B and C were merged into Class A on July 24, 2009 (See Class Mergers in the accompanying Notes to Financial Statements). | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Not annualized. | |
(i) | Annualized. | |
(j) | Commenced operations on September 30, 2005. |
16
- Ratios and Supplemental Data - | ||||||||||||||||||||||||||||
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||
17.45 | % | $ | 17,090 | 0.81 | % | 0.24 | % | 0.24 | % | 1.80 | % | 16 | % | |||||||||||||||
17.37 | 3,209 | 1.15 | 0.39 | 0.39 | 1.42 | — | ||||||||||||||||||||||
17.66 | 19,940 | 0.82 | 0.09 | 0.09 | 1.79 | — | ||||||||||||||||||||||
17.68 | 6,082 | 0.52 | 0.04 | 0.04 | 1.90 | — | ||||||||||||||||||||||
17.83 | 29 | 0.43 | 0.04 | 0.04 | 2.08 | — | ||||||||||||||||||||||
(34.83 | ) | 12,679 | 0.86 | 0.51 | 0.51 | 1.43 | 35 | |||||||||||||||||||||
(35.18 | ) | 1,070 | 1.25 | 0.86 | 0.86 | (0.10 | ) | — | ||||||||||||||||||||
(34.87 | ) | 7,578 | 0.89 | 0.54 | 0.54 | 0.17 | — | |||||||||||||||||||||
(34.82 | ) | 2,530 | 0.58 | 0.22 | 0.22 | 0.33 | — | |||||||||||||||||||||
(34.69 | ) | 25 | 0.54 | 0.19 | 0.19 | 1.89 | — | |||||||||||||||||||||
18.34 | 15,260 | 1.45 | 0.54 | 0.54 | 0.75 | 23 | ||||||||||||||||||||||
14.17 | (h) | 11 | 1.90 | (i) | 0.94 | (i) | 0.94 | (i) | (0.06 | ) (i) | — | |||||||||||||||||
14.48 | (h) | 640 | 1.54 | (i) | 0.64 | (i) | 0.64 | (i) | 0.29 | (i) | — | |||||||||||||||||
14.69 | (h) | 11 | 1.30 | (i) | 0.34 | (i) | 0.34 | (i) | 0.54 | (i) | — | |||||||||||||||||
18.60 | 38 | 1.12 | 0.24 | 0.24 | 1.90 | — | ||||||||||||||||||||||
10.00 | 1,857 | 14.20 | 0.53 | 0.53 | 0.37 | 19 | ||||||||||||||||||||||
10.40 | 32 | 13.67 | 0.21 | 0.21 | 1.10 | — | ||||||||||||||||||||||
(2.50 | ) (h) | 10 | 0.69 | (i) | 0.48 | (i) | 0.48 | (i) | 0.76 | (i) | 14 | |||||||||||||||||
(2.50 | ) (h) | 10 | 0.34 | (i) | 0.19 | (i) | 0.19 | (i) | 1.05 | (i) | — |
17
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
18
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity. |
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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. |
19
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 – 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 – 2009. |
20
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
21
U.S. Treasury* | 6.00 | % | ||
Other Direct Federal Obligations* | 1.00 | % | ||
Other Securities | 93.00 | % | ||
Total | 100.00 | % | ||
DRD† | 85.00 | % | ||
QDI‡ | 90.00 | % | ||
QII§ | 45.00 | % |
* | The income received from federal obligations. | |
† | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
‡ | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. | |
§ | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.116 | N/A | N/A | 0.116 | ||||||||||||
Class B | 0.091 | N/A | N/A | 0.091 | ||||||||||||
Class C | 0.081 | N/A | N/A | 0.081 | ||||||||||||
Class R3 | 0.140 | N/A | N/A | 0.140 | ||||||||||||
Class R4 | 0.117 | N/A | N/A | 0.117 | ||||||||||||
Class R5 | 0.129 | N/A | N/A | 0.129 | ||||||||||||
Class Y | 0.140 | N/A | N/A | 0.140 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,195.10 | $ | 1.38 | $ | 1,000.00 | $ | 1,023.95 | $ | 1.28 | 0.25 | % | 184 | 365 | |||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,193.50 | $ | 2.16 | $ | 1,000.00 | $ | 1,023.24 | $ | 1.99 | 0.39 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,197.20 | $ | 0.55 | $ | 1,000.00 | $ | 1,024.70 | $ | 0.51 | 0.10 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,196.90 | $ | 0.28 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,196.30 | $ | 0.28 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | 184 | 365 |
23
Fund Name | For | Against | Abstain | |||||||||
The Hartford Target Retirement 2030 Fund – Class B shares | 53,974.38 | 587.13 | 3,274.15 |
Fund Name | For | Against | Abstain | |||||||||
The Hartford Target Retirement 2030 Fund – Class C shares | 70,145.03 | 0 | 479.30 |
24
25
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
26
27
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
28
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks to maximize total return and secondarily, to seek capital preservation. |
Growth of a $10,000 investment in Class R3
1 | Since | |||||||
Year | Inception | |||||||
Target Retirement 2035 R3 | 17.72 | % | 17.72 | % | ||||
Target Retirement 2035 R4 | 18.09 | % | 18.09 | % | ||||
Target Retirement 2035 R5 | 18.10 | % | 18.10 | % | ||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 13.79 | % | ||||
S&P 500 Index | 9.78 | % | 9.78 | % |
(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 10/31/09, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |||
Managing Director | Vice President | |||
How did the Fund perform? | ||||
The Class R3 shares of The Hartford Target Retirement 2035 Fund returned 17.72%, before sales charge, for the twelve-month period ended October 31, 2009. In comparison, its benchmarks, the S&P 500 Index and the Barclays Capital U.S. Aggregate Bond Index, returned 9.78% and 13.79%, respectively, while the average return for the Lipper Mixed- Asset Target 2035 Funds, a group of funds with investment strategies similar to those of the Fund, was 16.94%. | ||||
Why did the Fund perform this way? | ||||
Investor appetite for risk changed dramatically over the course of this reporting period. At the beginning of the period fear dominated the market — high profile companies that were “too big to fail” were failing, and the government was scrambling to keep the financial system functioning. After a difficult first half of the year, investor risk aversion fell significantly and the year ending October 31, 2009 finished strong. |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 1.8 | % | ||
SPDR DJ Wilshire REIT ETF | 1.3 | |||
The Hartford Capital Appreciation Fund, Class Y | 14.5 | |||
The Hartford Capital Appreciation II Fund, Class Y | 4.5 | |||
The Hartford Disciplined Equity Fund, Class Y | 2.2 | |||
The Hartford Dividend and Growth Fund, Class Y | 1.2 | |||
The Hartford Equity Income Fund, Class Y | 2.3 | |||
The Hartford Fundamental Growth Fund, Class Y | 3.2 | |||
The Hartford Global Equity Fund, Class Y | 3.0 | |||
The Hartford Global Growth Fund, Class Y | 1.9 | |||
The Hartford Growth Fund, Class Y | 4.4 | |||
The Hartford Growth Opportunities Fund, Class Y | 1.7 | |||
The Hartford Inflation Plus Fund, Class Y | 4.5 | |||
The Hartford International Opportunities Fund, Class Y | 5.9 | |||
The Hartford International Small Company Fund, Class Y | 6.8 | |||
The Hartford MidCap Fund, Class Y | 0.3 | |||
The Hartford MidCap Growth Fund, Class Y | 1.6 | |||
The Hartford MidCap Value Fund, Class Y | 2.6 | |||
The Hartford Select MidCap Value Fund, Class Y | 0.8 | |||
The Hartford Select SmallCap Value Fund, Class Y | 2.4 | |||
The Hartford Short Duration Fund, Class Y | 1.1 | |||
The Hartford Small Company Fund, Class Y | 4.2 | |||
The Hartford SmallCap Growth Fund, Class Y | 2.2 | |||
The Hartford Total Return Bond Fund, Class Y | 7.4 | |||
The Hartford Value Fund, Class Y | 14.7 | |||
The Hartford Value Opportunities Fund, Class Y | 2.9 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
AFFILIATED INVESTMENT COMPANIES – 96.3% | ||||||||
EQUITY FUNDS – 83.3% | ||||||||
21 | The Hartford Capital Appreciation Fund, Class Y | $ | 649 | |||||
18 | The Hartford Capital Appreciation II Fund, Class Y | 200 | ||||||
9 | The Hartford Disciplined Equity Fund, Class Y• | 100 | ||||||
3 | The Hartford Dividend and Growth Fund, Class Y | 54 | ||||||
10 | The Hartford Equity Income Fund, Class Y | 103 | ||||||
15 | The Hartford Fundamental Growth Fund, Class Y• | 143 | ||||||
17 | The Hartford Global Equity Fund, Class Y | 133 | ||||||
6 | The Hartford Global Growth Fund, Class Y• | 85 | ||||||
14 | The Hartford Growth Fund, Class Y• | 198 | ||||||
4 | The Hartford Growth Opportunities Fund, Class Y• | 78 | ||||||
20 | The Hartford International Opportunities Fund, Class Y | 264 | ||||||
28 | The Hartford International Small Company Fund, Class Y | 304 | ||||||
1 | The Hartford MidCap Fund, Class Y• | 13 | ||||||
10 | The Hartford MidCap Growth Fund, Class Y• | 74 | ||||||
13 | The Hartford MidCap Value Fund, Class Y | 115 | ||||||
5 | The Hartford Select MidCap Value Fund, Class Y | 35 | ||||||
14 | The Hartford Select SmallCap Value Fund, Class Y | 110 | ||||||
12 | The Hartford Small Company Fund, Class Y• | 187 | ||||||
5 | The Hartford SmallCap Growth Fund, Class Y | 98 | ||||||
69 | The Hartford Value Fund, Class Y | 657 | ||||||
12 | The Hartford Value Opportunities Fund, Class Y | 130 | ||||||
Total equity funds (cost $3,241) | $ | 3,730 | ||||||
FIXED INCOME FUNDS – 13.0% | ||||||||
18 | The Hartford Inflation Plus Fund, Class Y | $ | 203 | |||||
5 | The Hartford Short Duration Fund, Class Y | 50 | ||||||
32 | The Hartford Total Return Bond Fund, Class Y | 334 | ||||||
Total fixed income funds (cost $539) | $ | 587 | ||||||
Total investments in affiliated investment Companies (cost $3,780) | $ | 4,317 | ||||||
EXCHANGE TRADED FUNDS – 3.1% | ||||||||
2 | SPDR DJ Wilshire International Real Estate ETF | $ | 79 | |||||
1 | SPDR DJ Wilshire REIT ETF | 60 | ||||||
Total exchange traded funds (cost $124) | $ | 139 | ||||||
Total long-term investments (cost $3,904) | $ | 4,456 | ||||||
Total investments (cost $3,904)▲ | 99.4 | % | $ | 4,456 | ||||||||
Other assets and liabilities | 0.6 | % | 27 | |||||||||
Total net assets | 100.0 | % | $ | 4,483 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $3,905 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 557 | ||
Unrealized Depreciation | (6 | ) | ||
Net Unrealized Appreciation | $ | 551 | ||
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 4,317 | $ | 4,317 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 139 | 139 | — | — | ||||||||||||
Total | $ | 4,456 | $ | 4,456 | $ | — | $ | — | ||||||||
5
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $124) | $ | 139 | ||
Investments in underlying affiliated funds, at market value (cost $3,780) | 4,317 | |||
Receivables: | ||||
Investment securities sold | 11 | |||
Fund shares sold | — | |||
Dividends and interest | 2 | |||
Other assets | 31 | |||
Total assets | 4,500 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 11 | |||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 6 | |||
Total liabilities | 17 | |||
Net assets | $ | 4,483 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,949 | |||
Accumulated undistributed net investment income | 19 | |||
Accumulated net realized loss on investments | (37 | ) | ||
Unrealized appreciation of investments | 552 | |||
Net assets | $ | 4,483 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 11.63 | ||
Shares outstanding | 130 | |||
Net assets | $ | 1,508 | ||
Class R4: Net asset value per share | $ | 11.66 | ||
Shares outstanding | 152 | |||
Net assets | $ | 1,777 | ||
Class R5: Net asset value per share | $ | 11.66 | ||
Shares outstanding | 103 | |||
Net assets | $ | 1,198 | ||
6
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 6 | ||
Dividends from underlying affiliated funds | 53 | |||
Interest | — | |||
Total investment income | 59 | |||
Expenses: | ||||
Investment management fees | 5 | |||
Administrative services fees | 5 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 5 | |||
Class R4 | 3 | |||
Custodian fees | 1 | |||
Accounting services fees | — | |||
Registration and filing fees | 37 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 5 | |||
Other expenses | 3 | |||
Total expenses (before waivers) | 65 | |||
Expense waivers | (60 | ) | ||
Total waivers | (60 | ) | ||
Total expenses, net | 5 | |||
Net Investment Income | 54 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (37 | ) | ||
Net realized gain on investments in securities | — | |||
Net Realized Loss on Investments | (37 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 552 | |||
Net Changes in Unrealized Appreciation of Investments | 552 | |||
Net Gain on Investments | 515 | |||
Net Increase in Net Assets Resulting from Operations | $ | 569 | ||
7
(000’s Omitted)
For the | ||||||||
For the | One-Day | |||||||
Year Ended | Period Ended | |||||||
October 31, 2009 | October 31, 2008* | |||||||
Operations: | ||||||||
Net investment income | $ | 54 | $ | — | ||||
Net realized loss on investments | (37 | ) | — | |||||
Net unrealized appreciation of investments | 552 | — | ||||||
Net Increase In Net Assets Resulting From Operations | 569 | — | ||||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class R3 | (11 | ) | — | |||||
Class R4 | (12 | ) | — | |||||
Class R5 | (12 | ) | — | |||||
Total distributions | (35 | ) | — | |||||
Capital Share Transactions: | ||||||||
Class R3 | 338 | 1,000 | ||||||
Class R4 | 583 | 1,000 | ||||||
Class R5 | 28 | 1,000 | ||||||
Net increase from capital share transactions | 949 | 3,000 | ||||||
Net Increase In Net Assets | 1,483 | 3,000 | ||||||
Net Assets: | ||||||||
Beginning of period | 3,000 | — | ||||||
End of period | $ | 4,483 | $ | 3,000 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 19 | $ | — | ||||
* | Commencement of operations. |
8
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
2. | Significant Accounting Policies: | |
The accounting policies of the 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 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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. | ||
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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
October 31, 2009
(000’s Omitted)
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may use 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 October 31, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. |
10
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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
11
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings — 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, 2009 | ||||
Ordinary Income | $ | 35 |
Amount | ||||
Undistributed Ordinary Income | $ | 19 | ||
Accumulated Capital Losses * | (36 | ) | ||
Unrealized Appreciation † | 551 | |||
Total Accumulated Earnings | $ | 534 | ||
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2017 | $ | 36 | ||
Total | $ | 36 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
12
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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 a Distribution and Service Plan 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. | |||
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated in an amount that rounds to zero for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
13
October 31, 2009
(000’s Omitted)
5. | Affiliate Holdings: | |
As of October 31, 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 year ended October 31, 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 | $ | 4,388 | ||
Sales Proceeds Excluding U.S. Government Obligations | 447 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and for the one-day period ended October 31, 2008: |
For the Year Ended October 31, 2009 | For the One-Day Period 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 R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 31 | 1 | (2 | ) | — | 30 | 100 | — | — | — | 100 | |||||||||||||||||||||||||||||
Amount | $ | 353 | $ | 11 | $ | (26 | ) | $ | — | $ | 338 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 55 | 1 | (4 | ) | — | 52 | 100 | — | — | — | 100 | |||||||||||||||||||||||||||||
Amount | $ | 621 | $ | 12 | $ | (50 | ) | $ | — | $ | 583 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | |||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 2 | 1 | — | — | 3 | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | 16 | $ | 12 | $ | — | $ | — | $ | 28 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
14
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008 through October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.15 | $ | — | $ | 1.59 | $ | 1.74 | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | 1.63 | $ | 11.63 | ||||||||||||||||||||
R4 | 10.00 | 0.17 | — | 1.61 | 1.78 | (0.12 | ) | — | — | (0.12 | ) | 1.66 | 11.66 | |||||||||||||||||||||||||||||||
R5 | 10.00 | 0.18 | — | 1.60 | 1.78 | (0.12 | ) | — | — | (0.12 | ) | 1.66 | 11.66 |
(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 and the complete redemption of the investment at net asset value at the end of each period. | |
(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. |
16
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||
Net Assets at | Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net | ||||||||||||||||||||
End of Period | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Rate(d) | ||||||||||||||||||
17.72% | $ | 1,508 | 2.35 | % | 0.37 | % | 0.37 | % | 1.50 | % | 15 | % | ||||||||||||
18.09 | 1,777 | 2.03 | 0.07 | 0.07 | 1.75 | — | ||||||||||||||||||
18.10 | 1,198 | 1.77 | 0.02 | 0.02 | 1.84 | — |
17
The Hartford Mutual Funds, Inc.
December 15, 2009
18
19
Directors and Officers (Unaudited) — (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
20
21
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class R3 | 0.112 | N/A | N/A | 0.112 | ||||||||||||
Class R4 | 0.117 | N/A | N/A | 0.117 | ||||||||||||
Class R5 | 0.118 | N/A | N/A | 0.118 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,206.40 | $ | 2.06 | $ | 1,000.00 | $ | 1,023.34 | $ | 1.89 | 0.37 | % | 184 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,208.30 | $ | 0.39 | $ | 1,000.00 | $ | 1,024.85 | $ | 0.36 | 0.07 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,208.30 | $ | 0.17 | $ | 1,000.00 | $ | 1,025.05 | $ | 0.15 | 0.03 | 184 | 365 |
23
24
25
26
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 |
(subadvised by Hartford Investment Management Company)
secondarily, to seek capital preservation.
Growth of a $10,000 investment in Class R3
1 | Since | |||||||
Year | Inception | |||||||
Target Retirement 2040 R3 | 17.34 | % | 17.34 | % | ||||
Target Retirement 2040 R4 | 17.70 | % | 17.70 | % | ||||
Target Retirement 2040 R5 | 17.81 | % | 17.81 | % | ||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 13.79 | % | ||||
S&P 500 Index | 9.78 | % | 9.78 | % |
(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 10/31/09, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 1.9 | % | ||
SPDR DJ Wilshire REIT ETF | 1.4 | |||
The Hartford Capital Appreciation Fund, Class Y | 14.8 | |||
The Hartford Capital Appreciation II Fund, Class Y | 4.6 | |||
The Hartford Dividend and Growth Fund, Class Y | 1.3 | |||
The Hartford Equity Income Fund, Class Y | 4.6 | |||
The Hartford Fundamental Growth Fund, Class Y | 3.2 | |||
The Hartford Global Equity Fund, Class Y | 2.1 | |||
The Hartford Global Growth Fund, Class Y | 0.2 | |||
The Hartford Growth Fund, Class Y | 5.3 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.0 | |||
The Hartford Inflation Plus Fund, Class Y | 4.3 | |||
The Hartford International Opportunities Fund, Class Y | 9.1 | |||
The Hartford International Small Company Fund, Class Y | 6.7 | |||
The Hartford MidCap Fund, Class Y | 0.8 | |||
The Hartford MidCap Growth Fund, Class Y | 1.1 | |||
The Hartford MidCap Value Fund, Class Y | 1.5 | |||
The Hartford Select MidCap Value Fund, Class Y | 2.6 | |||
The Hartford Select SmallCap Value Fund, Class Y | 2.9 | |||
The Hartford Small Company Fund, Class Y | 5.0 | |||
The Hartford Total Return Bond Fund, Class Y | 5.0 | |||
The Hartford Value Fund, Class Y | 17.7 | |||
The Hartford Value Opportunities Fund, Class Y | 1.2 | |||
Other Assets and Liabilities | 0.7 | |||
Total | 100.0 | % | ||
3
October 31, 2009
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 96.0% | ||||||||||||
EQUITY FUNDS - 86.7% | ||||||||||||
21 | The Hartford Capital Appreciation Fund, Class Y | $ | 630 | |||||||||
18 | The Hartford Capital Appreciation II Fund, Class Y • | 195 | ||||||||||
3 | The Hartford Dividend and Growth Fund, Class Y | 53 | ||||||||||
18 | The Hartford Equity Income Fund, Class Y | 195 | ||||||||||
15 | The Hartford Fundamental Growth Fund, Class Y • | 138 | ||||||||||
11 | The Hartford Global Equity Fund, Class Y | 91 | ||||||||||
— | The Hartford Global Growth Fund, Class Y • | 7 | ||||||||||
16 | The Hartford Growth Fund, Class Y • | 226 | ||||||||||
4 | The Hartford Growth Opportunities Fund, Class Y • | 86 | ||||||||||
30 | The Hartford International Opportunities Fund, Class Y | 388 | ||||||||||
26 | The Hartford International Small Company Fund, Class Y | 284 | ||||||||||
2 | The Hartford MidCap Fund, Class Y • | 32 | ||||||||||
6 | The Hartford MidCap Growth Fund, Class Y • | 47 | ||||||||||
7 | The Hartford MidCap Value Fund, Class Y | 62 | ||||||||||
14 | The Hartford Select MidCap Value Fund, Class Y | 110 | ||||||||||
16 | The Hartford Select SmallCap Value Fund, Class Y | 125 | ||||||||||
14 | The Hartford Small Company Fund, Class Y • | 212 | ||||||||||
79 | The Hartford Value Fund, Class Y | 753 | ||||||||||
5 | The Hartford Value Opportunities Fund, Class Y | 51 | ||||||||||
Total equity funds (cost $3,210) | $ | 3,685 | ||||||||||
FIXED INCOME FUNDS - 9.3% | ||||||||||||
16 | The Hartford Inflation Plus Fund, Class Y | $ | 183 | |||||||||
20 | The Hartford Total Return Bond Fund, Class Y | 212 | ||||||||||
Total fixed income funds (cost $363) | $ | 395 | ||||||||||
Total investments in affiliated investment companies (cost $3,573) | $ | 4,080 | ||||||||||
EXCHANGE TRADED FUNDS - 3.3% | ||||||||||||
2 | SPDR DJ Wilshire International Real Estate ETF | $ | 83 | |||||||||
1 | SPDR DJ Wilshire REIT ETF | 60 | ||||||||||
Total exchange traded funds (cost $128) | $ | 143 | ||||||||||
Total long-term investments (cost $3,701) | $ | 4,223 | ||||||||||
Total investments (cost $3,701) ▲ | 99.3 | % | $ | 4,223 | ||||||||
Other assets and liabilities | 0.7 | % | 28 | |||||||||
Total net assets | 100.0 | % | $ | 4,251 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $3,702 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 522 | ||
Unrealized Depreciation | (1 | ) | ||
Net Unrealized Appreciation | $ | 521 | ||
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 4,080 | $ | 4,080 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 143 | 143 | — | — | ||||||||||||
Total | $ | 4,223 | $ | 4,223 | $ | — | $ | — | ||||||||
5
October 31, 2009
Assets: | ||||
Investments in securities, at market value (cost $128) | $ | 143 | ||
Investments in underlying affiliated funds, at market value (cost $3,573) | 4,080 | |||
Receivables: | ||||
Investment securities sold | 3 | |||
Fund shares sold | — | |||
Dividends and interest | 1 | |||
Other assets | 33 | |||
Total assets | 4,260 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 3 | |||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 6 | |||
Total liabilities | 9 | |||
Net assets | $ | 4,251 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,745 | |||
Accumulated undistributed net investment income | 18 | |||
Accumulated net realized loss on investments | (34 | ) | ||
Unrealized appreciation of investments | 522 | |||
Net assets | $ | 4,251 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 11.59 | ||
Shares outstanding | 112 | |||
Net assets | $ | 1,301 | ||
Class R4: Net asset value per share | $ | 11.62 | ||
Shares outstanding | 140 | |||
Net assets | $ | 1,629 | ||
Class R5: Net asset value per share | $ | 11.63 | ||
Shares outstanding | 114 | |||
Net assets | $ | 1,321 | ||
6
For the Year Ended October 31, 2009
Investment Income: | ||||
Dividends | $ | 6 | ||
Dividends from underlying affiliated funds | 51 | |||
Interest | — | |||
Total investment income | 57 | |||
Expenses: | ||||
Investment management fees | 4 | |||
Administrative services fees | 5 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 5 | |||
Class R4 | 3 | |||
Custodian fees | 1 | |||
Accounting services fees | — | |||
Registration and filing fees | 37 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 5 | |||
Other expenses | 4 | |||
Total expenses (before waivers) | 65 | |||
Expense waivers | (61 | ) | ||
Total waivers | (61 | ) | ||
Total expenses, net | 4 | |||
Net Investment Income | 53 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (34 | ) | ||
Net realized gain on investments in securities | — | |||
Net Realized Loss on Investments | (34 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 522 | |||
Net Changes in Unrealized Appreciation of Investments | 522 | |||
Net Gain on Investments | 488 | |||
Net Increase in Net Assets Resulting from Operations | $ | 541 | ||
7
For the | ||||||||
For the | One-Day | |||||||
Year Ended | Period Ended | |||||||
October 31, 2009 | October 31, 2008* | |||||||
Operations: | ||||||||
Net investment income | $ | 53 | $ | — | ||||
Net realized loss on investments | (34 | ) | — | |||||
Net unrealized appreciation of investments | 522 | — | ||||||
Net Increase In Net Assets Resulting From Operations | 541 | — | ||||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class R3 | (11 | ) | — | |||||
Class R4 | (12 | ) | — | |||||
Class R5 | (12 | ) | — | |||||
Total distributions | (35 | ) | — | |||||
Capital Share Transactions: | ||||||||
Class R3 | 134 | 1,000 | ||||||
Class R4 | 457 | 1,000 | ||||||
Class R5 | 154 | 1,000 | ||||||
Net increase from capital share transactions | 745 | 3,000 | ||||||
Net Increase In Net Assets | 1,251 | 3,000 | ||||||
Net Assets: | ||||||||
Beginning of period | 3,000 | — | ||||||
End of period | $ | 4,251 | $ | 3,000 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 18 | $ | — | ||||
* | Commencement of operations. |
8
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
2. | Significant Accounting Policies: | |
The accounting policies of the 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 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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. | ||
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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 |
9
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. 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 Valuation Time. 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 are 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may use 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 October 31, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. |
10
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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
11
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings — 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, 2009 | ||||
Ordinary Income | $ | 35 |
Amount | ||||
Undistributed Ordinary Income | $ | 18 | ||
Accumulated Capital Losses * | (33 | ) | ||
Unrealized Appreciation † | 521 | |||
Total Accumulated Earnings | $ | 506 | ||
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2017 | $ | 33 | ||
Total | $ | 33 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
12
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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 a Distribution and Service Plan 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. | |||
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated in an amount that rounds to zero for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
5. | Affiliate Holdings: | |
As of October 31, 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 year ended October 31, 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 | $ | 4,171 | ||
Sales Proceeds Excluding U.S. Government Obligations | 436 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and for the one-day period ended October 31, 2008: |
For the Year Ended October 31, 2009 | For the One-Day Period 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 R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 11 | 1 | — | — | 12 | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | 123 | $ | 11 | $ | — | $ | — | $ | 134 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | ||||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 48 | 1 | (9 | ) | — | 40 | 100 | — | — | — | 100 | |||||||||||||||||||||||||||||
Amount | $ | 550 | $ | 11 | $ | (104 | ) | $ | — | $ | 457 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | |||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 13 | 1 | — | — | 14 | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | 145 | $ | 12 | $ | (3 | ) | $ | — | $ | 154 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
14
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008 through October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.15 | $ | — | $ | 1.55 | $ | 1.70 | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | 1.59 | $ | 11.59 | ||||||||||||||||||||
R4 | 10.00 | 0.17 | — | 1.57 | 1.74 | (0.12 | ) | — | — | (0.12 | ) | 1.62 | 11.62 | |||||||||||||||||||||||||||||||
R5 | 10.00 | 0.18 | — | 1.57 | 1.75 | (0.12 | ) | — | — | (0.12 | ) | 1.63 | 11.63 |
(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 and the complete redemption of the investment at net asset value at the end of each period. | |
(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. |
16
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||
17.34% | $ | 1,301 | 2.41 | % | 0.35 | % | 0.35 | % | 1.48 | % | 15 | % | ||||||||||||
17.70 | 1,629 | 2.10 | 0.05 | 0.05 | 1.79 | — | ||||||||||||||||||
17.81 | 1,321 | 1.81 | — | — | 1.83 | — |
17
of The Hartford Mutual Funds, Inc.
December 15, 2009
18
19
Directors and Officers (Unaudited) — (continued)
20
21
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class R3 | 0.112 | N/A | N/A | 0.112 | ||||||||||||
Class R4 | 0.117 | N/A | N/A | 0.117 | ||||||||||||
Class R5 | 0.118 | N/A | N/A | 0.118 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,208.60 | $ | 1.95 | $ | 1,000.00 | $ | 1,023.44 | $ | 1.79 | 0.35 | % | 184 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,211.70 | $ | 0.28 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,211.50 | $ | — | $ | 1,000.00 | $ | 1,025.21 | $ | — | — | 184 | 365 |
23
24
25
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
26
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Target Retirement 2045 Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 |
The Hartford Target Retirement 2045 Fund inception 10/31/2008 (subadvised by Hartford Investment Management Company) | Investment objective — Seeks to maximize total return and secondarily, to seek capital preservation. |
Growth of a $10,000 investment in Class R3
1 | Since | |||||||
Year | Inception | |||||||
Target Retirement 2045 R3 | 17.28 | % | 17.28 | % | ||||
Target Retirement 2045 R4 | 17.65 | % | 17.65 | % | ||||
Target Retirement 2045 R5 | 17.65 | % | 17.65 | % | ||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 13.79 | % | ||||
S&P 500 Index | 9.78 | % | 9.78 | % |
(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 10/31/09, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 2.3 | % | ||
SPDR DJ Wilshire REIT ETF | 1.3 | |||
The Hartford Capital Appreciation Fund, Class Y | 17.9 | |||
The Hartford Capital Appreciation II Fund, Class Y | 3.0 | |||
The Hartford Dividend and Growth Fund, Class Y | 0.6 | |||
The Hartford Equity Income Fund, Class Y | 0.5 | |||
The Hartford Fundamental Growth Fund, Class Y | 4.8 | |||
The Hartford Global Growth Fund, Class Y | 2.9 | |||
The Hartford Growth Fund, Class Y | 7.6 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.7 | |||
The Hartford Inflation Plus Fund, Class Y | 2.9 | |||
The Hartford International Opportunities Fund, Class Y | 7.0 | |||
The Hartford International Small Company Fund, Class Y | 8.8 | |||
The Hartford MidCap Fund, Class Y | 0.1 | |||
The Hartford MidCap Growth Fund, Class Y | 1.3 | |||
The Hartford MidCap Value Fund, Class Y | 2.7 | |||
The Hartford Select MidCap Value Fund, Class Y | 0.4 | |||
The Hartford Select SmallCap Value Fund, Class Y | 3.0 | |||
The Hartford Small Company Fund, Class Y | 6.6 | |||
The Hartford Total Return Bond Fund, Class Y | 2.4 | |||
The Hartford Value Fund, Class Y | 17.9 | |||
The Hartford Value Opportunities Fund, Class Y | 2.7 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
3
October 31, 2009
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 95.8% | ||||||||||||
EQUITY FUNDS - 90.5% | ||||||||||||
24 | The Hartford Capital Appreciation Fund, Class Y | $ | 730 | |||||||||
11 | The Hartford Capital Appreciation II Fund, Class Y • | 121 | ||||||||||
1 | The Hartford Dividend and Growth Fund, Class Y | 23 | ||||||||||
2 | The Hartford Equity Income Fund, Class Y | 20 | ||||||||||
21 | The Hartford Fundamental Growth Fund, Class Y • | 197 | ||||||||||
9 | The Hartford Global Growth Fund, Class Y • | 116 | ||||||||||
22 | The Hartford Growth Fund, Class Y • | 308 | ||||||||||
5 | The Hartford Growth Opportunities Fund, Class Y • | 108 | ||||||||||
22 | The Hartford International Opportunities Fund, Class Y | 283 | ||||||||||
33 | The Hartford International Small Company Fund, Class Y | 358 | ||||||||||
— | The Hartford MidCap Fund, Class Y • | 6 | ||||||||||
7 | The Hartford MidCap Growth Fund, Class Y • | 54 | ||||||||||
13 | The Hartford MidCap Value Fund, Class Y | 111 | ||||||||||
2 | The Hartford Select MidCap Value Fund, Class Y | 17 | ||||||||||
15 | The Hartford Select SmallCap Value Fund, Class Y | 122 | ||||||||||
18 | The Hartford Small Company Fund, Class Y • | 269 | ||||||||||
76 | The Hartford Value Fund, Class Y | 729 | ||||||||||
11 | The Hartford Value Opportunities Fund, Class Y | 111 | ||||||||||
Total equity funds (cost $3,216) | $ | 3,683 | ||||||||||
FIXED INCOME FUNDS - 5.3% | ||||||||||||
10 | The Hartford Inflation Plus Fund, Class Y | $ | 118 | |||||||||
9 | The Hartford Total Return Bond Fund, Class Y | 98 | ||||||||||
Total fixed income funds (cost $196) | $ | 216 | ||||||||||
Total investments in affiliated investment companies (cost $3,412) | $ | 3,899 | ||||||||||
EXCHANGE TRADED FUNDS - 3.6% | ||||||||||||
3 | SPDR DJ Wilshire International Real Estate ETF | $ | 91 | |||||||||
1 | SPDR DJ Wilshire REIT ETF | 53 | ||||||||||
Total exchange traded funds (cost $131) | $ | 144 | ||||||||||
Total long-term investments (cost $3,543) | $ | 4,043 | ||||||||||
Total investments (cost $3,543) ▲ | 99.4 | % | $ | 4,043 | ||||||||
Other assets and liabilities | 0.6 | % | 26 | |||||||||
Total net assets | 100.0 | % | $ | 4,069 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $3,543 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 502 | ||
Unrealized Depreciation | (2 | ) | ||
Net Unrealized Appreciation | $ | 500 | ||
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
October 31, 2009
(000’s Omitted))
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 3,899 | $ | 3,899 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 144 | 144 | — | — | ||||||||||||
Total | $ | 4,043 | $ | 4,043 | $ | — | $ | — | ||||||||
5
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $131) | $ | 144 | ||
Investments in underlying affiliated funds, at market value (cost $3,412) | 3,899 | |||
Receivables: | ||||
Investment securities sold | 1 | |||
Dividends and interest | 1 | |||
Other assets | 31 | |||
Total assets | 4,076 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 1 | |||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 6 | |||
Total liabilities | 7 | |||
Net assets | $ | 4,069 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,562 | |||
Accumulated undistributed net investment income | 10 | |||
Accumulated net realized loss on investments | (3 | ) | ||
Unrealized appreciation of investments | 500 | |||
Net assets | $ | 4,069 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 11.59 | ||
Shares outstanding | 119 | |||
Net assets | $ | 1,380 | ||
Class R4: Net asset value per share | $ | 11.62 | ||
Shares outstanding | 129 | |||
Net assets | $ | 1,499 | ||
Class R5: Net asset value per share | $ | 11.62 | ||
Shares outstanding | 102 | |||
Net assets | $ | 1,190 | ||
6
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 6 | ||
Dividends from underlying affiliated funds | 43 | |||
Interest | — | |||
Total investment income | 49 | |||
Expenses: | ||||
Investment management fees | 5 | |||
Administrative services fees | 5 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 5 | |||
Class R4 | 3 | |||
Custodian fees | 1 | |||
Accounting services fees | — | |||
Registration and filing fees | 37 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 5 | |||
Other expenses | 3 | |||
Total expenses (before waivers) | 65 | |||
Expense waivers | (59 | ) | ||
Total waivers | (59 | ) | ||
Total expenses, net | 6 | |||
Net Investment Income | 43 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (3 | ) | ||
Net realized gain on investments in securities | — | |||
Net Realized Loss on Investments | (3 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 500 | |||
Net Changes in Unrealized Appreciation of Investments | 500 | |||
Net Gain on Investments | 497 | |||
Net Increase in Net Assets Resulting from Operations | $ | 540 | ||
7
(000’s Omitted)
For the | ||||||||
For the | One-Day | |||||||
Year Ended | Period Ended | |||||||
October 31, 2009 | October 31, 2008* | |||||||
Operations: | ||||||||
Net investment income | $ | 43 | $ | — | ||||
Net realized loss on investments | (3 | ) | — | |||||
Net unrealized appreciation of investments | 500 | — | ||||||
Net Increase In Net Assets Resulting From Operations | 540 | — | ||||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class R3 | (11 | ) | — | |||||
Class R4 | (11 | ) | — | |||||
Class R5 | (11 | ) | — | |||||
Total distributions | (33 | ) | — | |||||
Capital Share Transactions: | ||||||||
Class R3 | 217 | 1,000 | ||||||
Class R4 | 320 | 1,000 | ||||||
Class R5 | 25 | 1,000 | ||||||
Net increase from capital share transactions | 562 | 3,000 | ||||||
Net Increase In Net Assets | 1,069 | 3,000 | ||||||
Net Assets: | ||||||||
Beginning of period | 3,000 | — | ||||||
End of period | $ | 4,069 | $ | 3,000 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 10 | $ | — | ||||
* | Commencement of operations. |
8
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
2. | Significant Accounting Policies: | |
The accounting policies of the 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 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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. | ||
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 may use 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 October 31, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. |
10
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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
11
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings — 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, 2009 | ||||
Ordinary Income | $ | 33 |
Amount | ||||
Undistributed Ordinary Income | $ | 10 | ||
Accumulated Capital Losses * | (3 | ) | ||
Unrealized Appreciation † | 500 | |||
Total Accumulated Earnings | $ | 507 | ||
* | 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) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund had no reclassifications. | ||
e) | Capital Loss Carryforward — At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2017 | $ | 3 | ||
Total | $ | 3 | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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. |
12
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 services 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 year ended October 31, 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 a Distribution and Service Plan 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. | |||
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated in an amount that rounds to zero for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
5. | Affiliate Holdings: | |
As of October 31, 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 year ended October 31, 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 | $ | 3,755 | ||
Sales Proceeds Excluding U.S. Government Obligations | 209 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and for the one-day period ended October 31, 2008: |
For the Year Ended October 31, 2009 | For the One-Day Period 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 R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 18 | 1 | — | — | 19 | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | 207 | $ | 11 | $ | (1 | ) | $ | — | $ | 217 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 29 | 1 | (1 | ) | — | 29 | 100 | — | — | — | 100 | |||||||||||||||||||||||||||||
Amount | $ | 318 | $ | 11 | $ | (9 | ) | $ | — | $ | 320 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | |||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1 | 1 | — | — | 2 | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | 14 | $ | 11 | $ | — | $ | — | $ | 25 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
14
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008 through October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.12 | $ | — | $ | 1.58 | $ | 1.70 | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | 1.59 | $ | 11.59 | ||||||||||||||||||||
R4 | 10.00 | 0.15 | — | 1.58 | 1.73 | (0.11 | ) | — | — | (0.11 | ) | 1.62 | 11.62 | |||||||||||||||||||||||||||||||
R5 | 10.00 | 0.15 | — | 1.58 | 1.73 | (0.11 | ) | — | — | (0.11 | ) | 1.62 | 11.62 |
(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 and the complete redemption of the investment at net asset value at the end of each period. | |
(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. |
16
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||||||
Net Assets at | Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net | ||||||||||||||||||||||||
End of Period | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio Turnover | |||||||||||||||||||||||
Total Return(b) | (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Rate(d) | ||||||||||||||||||||||
17.28 | % | $ | 1,380 | 2.40 | % | 0.39 | % | 0.39 | % | 1.21 | % | 7 | % | |||||||||||||||
17.65 | 1,499 | 2.08 | 0.09 | 0.09 | 1.49 | — | ||||||||||||||||||||||
17.65 | 1,190 | 1.82 | 0.04 | 0.04 | 1.54 | — |
17
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
18
19
Directors and Officers (Unaudited) — (continued)
(2007 — 2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006 — 2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp.
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
20
21
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class R3 | 0.108 | N/A | N/A | 0.108 | ||||||||||||
Class R4 | 0.113 | N/A | N/A | 0.113 | ||||||||||||
Class R5 | 0.113 | N/A | N/A | 0.113 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,212.30 | $ | 2.23 | $ | 1,000.00 | $ | 1,023.19 | $ | 2.04 | 0.40 | % | 184 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,214.20 | $ | 0.50 | $ | 1,000.00 | $ | 1,024.75 | $ | 0.46 | 0.09 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,214.20 | $ | 0.28 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | 184 | 365 |
23
24
25
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
26
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Target Retirement 2050 Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
16 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 | ||||
23 | ||||
24 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks to maximize total return and secondarily, to seek capital preservation. |
Growth of a $10,000 investment in Class R3
1 | Since | |||||||
Year | Inception | |||||||
Target Retirement 2050 R3 | 17.18 | % | 17.18 | % | ||||
Target Retirement 2050 R4 | 17.54 | % | 17.54 | % | ||||
Target Retirement 2050 R5 | 17.55 | % | 17.55 | % | ||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 13.79 | % | ||||
S&P 500 Index | 9.78 | % | 9.78 | % |
(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 10/31/09, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
as of October 31, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 2.4 | % | ||
SPDR DJ Wilshire REIT ETF | 1.4 | |||
The Hartford Capital Appreciation Fund, Class Y | 19.5 | |||
The Hartford Capital Appreciation II Fund, Class Y | 3.1 | |||
The Hartford Dividend and Growth Fund, Class Y | 0.3 | |||
The Hartford Equity Income Fund, Class Y | 0.3 | |||
The Hartford Fundamental Growth Fund, Class Y | 5.3 | |||
The Hartford Global Growth Fund, Class Y | 3.0 | |||
The Hartford Growth Fund, Class Y | 8.2 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.9 | |||
The Hartford Inflation Plus Fund, Class Y | 2.8 | |||
The Hartford International Opportunities Fund, Class Y | 7.6 | |||
The Hartford International Small Company Fund, Class Y | 5.6 | |||
The Hartford MidCap Value Fund, Class Y | 2.3 | |||
The Hartford Select MidCap Value Fund, Class Y | 0.1 | |||
The Hartford Select SmallCap Value Fund, Class Y | 3.3 | |||
The Hartford Small Company Fund, Class Y | 7.2 | |||
The Hartford Total Return Bond Fund, Class Y | 2.6 | |||
The Hartford Value Fund, Class Y | 19.5 | |||
The Hartford Value Opportunities Fund, Class Y | 1.9 | |||
Other Assets and Liabilities | 0.7 | |||
Total | 100.0 | % | ||
3
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 95.5% | ||||||||||||
EQUITY FUNDS - 90.1% | ||||||||||||
24 | The Hartford Capital Appreciation Fund, Class Y | $ | 728 | |||||||||
10 | The Hartford Capital Appreciation II Fund, Class Y• | 114 | ||||||||||
1 | The Hartford Dividend and Growth Fund, Class Y | 12 | ||||||||||
1 | The Hartford Equity Income Fund, Class Y | 13 | ||||||||||
21 | The Hartford Fundamental Growth Fund, Class Y• | 197 | ||||||||||
9 | The Hartford Global Growth Fund, Class Y• | 114 | ||||||||||
22 | The Hartford Growth Fund, Class Y• | 307 | ||||||||||
5 | The Hartford Growth Opportunities Fund, Class Y• | 108 | ||||||||||
22 | The Hartford International Opportunities Fund, Class Y | 283 | ||||||||||
19 | The Hartford International Small Company Fund, Class Y | 211 | ||||||||||
10 | The Hartford MidCap Value Fund, Class Y | 87 | ||||||||||
— | The Hartford Select MidCap Value Fund, Class Y | 2 | ||||||||||
15 | The Hartford Select SmallCap Value Fund, Class Y | 122 | ||||||||||
18 | The Hartford Small Company Fund, Class Y• | 269 | ||||||||||
76 | The Hartford Value Fund, Class Y | 729 | ||||||||||
7 | The Hartford Value Opportunities Fund, Class Y | 72 | ||||||||||
Total equity funds (cost $2,919) | $ | 3,368 | ||||||||||
FIXED INCOME FUNDS - 5.4% | ||||||||||||
9 | The Hartford Inflation Plus Fund, Class Y | $ | 103 | |||||||||
9 | The Hartford Total Return Bond Fund, Class Y | 98 | ||||||||||
Total fixed income funds (cost $184) | $ | 201 | ||||||||||
Total investments in affiliated investment companies (cost $3,103) | $ | 3,569 | ||||||||||
EXCHANGE TRADED FUNDS - 3.8% | ||||||||||||
3 | SPDR DJ Wilshire International Real Estate ETF | $ | 91 | |||||||||
1 | SPDR DJ Wilshire REIT ETF | 53 | ||||||||||
Total exchange traded funds (cost $131) | $ | 144 | ||||||||||
Total long-term investments (cost $3,234) | $ | 3,713 | ||||||||||
Total investments (cost $3,234) 5 | 99.3 | % | $ | 3,713 | ||||||||
Other assets and liabilities | 0.7 | % | 24 | |||||||||
Total net assets | 100.0 | % | $ | 3,737 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
5 | At October 31, 2009, the cost of securities for federal income tax purposes was $3,234 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 488 | ||
Unrealized Depreciation | (9 | ) | ||
Net Unrealized Appreciation | $ | 479 | ||
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
4
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 3,569 | $ | 3,569 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 144 | 144 | — | — | ||||||||||||
Total | $ | 3,713 | $ | 3,713 | $ | — | $ | — | ||||||||
5
Assets: | ||||
Investments in securities, at market value (cost $131) | $ | 144 | ||
Investments in underlying affiliated funds, at market value (cost $3,103) | 3,569 | |||
Receivables: | ||||
Fund shares sold | — | |||
Dividends and interest | — | |||
Other assets | 30 | |||
Total assets | 3,743 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | — | |||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 6 | |||
Total liabilities | 6 | |||
Net assets | $ | 3,737 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,248 | |||
Accumulated undistributed net investment income | 10 | |||
Accumulated net realized gain on investments | — | |||
Unrealized appreciation of investments | 479 | |||
Net assets | $ | 3,737 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 11.58 | ||
Shares outstanding | 111 | |||
Net assets | $ | 1,285 | ||
Class R4: Net asset value per share | $ | 11.61 | ||
Shares outstanding | 109 | |||
Net assets | $ | 1,262 | ||
Class R5: Net asset value per share | $ | 11.61 | ||
Shares outstanding | 103 | |||
Net assets | $ | 1,190 | ||
6
Investment Income: | ||||
Dividends | $ | 5 | ||
Dividends from underlying affiliated funds | 43 | |||
Interest | — | |||
Total investment income | 48 | |||
Expenses: | ||||
Investment management fees | 4 | |||
Administrative services fees | 4 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 5 | |||
Class R4 | 3 | |||
Custodian fees | 1 | |||
Accounting services fees | — | |||
Registration and filing fees | 37 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 5 | |||
Other expenses | 4 | |||
Total expenses (before waivers) | 64 | |||
Expense waivers | (59 | ) | ||
Total waivers | (59 | ) | ||
Total expenses, net | 5 | |||
Net Investment Income | 43 | |||
Net Realized Gain on Investments: | ||||
Net realized gain on investments in underlying affiliated funds | 1 | |||
Net realized gain on investments in securities | — | |||
Net Realized Gain on Investments | 1 | |||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 479 | |||
Net Changes in Unrealized Appreciation of Investments | 479 | |||
Net Gain on Investments | 480 | |||
Net Increase in Net Assets Resulting from Operations | $ | 523 | ||
7
For the | ||||||||
For the | One-Day | |||||||
Year Ended | Period Ended | |||||||
October 31, 2009 | October 31, 2008* | |||||||
Operations: | ||||||||
Net investment income | $ | 43 | $ | — | ||||
Net realized gain on investments | 1 | — | ||||||
Net unrealized appreciation of investments | 479 | — | ||||||
Net Increase In Net Assets Resulting From Operations | 523 | — | ||||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class R3 | (11 | ) | — | |||||
Class R4 | (11 | ) | — | |||||
Class R5 | (11 | ) | — | |||||
Total distributions | (33 | ) | — | |||||
Capital Share Transactions: | ||||||||
Class R3 | 124 | 1,000 | ||||||
Class R4 | 100 | 1,000 | ||||||
Class R5 | 23 | 1,000 | ||||||
Net increase from capital share transactions | 247 | 3,000 | ||||||
Net Increase In Net Assets | 737 | 3,000 | ||||||
Net Assets: | ||||||||
Beginning of period | 3,000 | — | ||||||
End of period | $ | 3,737 | $ | 3,000 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 10 | $ | — | ||||
* | Commencement of operations. |
8
1. | Organization: |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 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 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 per share net asset value (“NAV”) of each Underlying Fund as determined as of the close of the New York Stock Exchange (the “Exchange”) (generally 4 p.m., Eastern time, referred to as the “Valuation Time”) on the valuation date. |
The Fund generally uses market prices in valuing the remaining 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 market, but before the close of the Exchange 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
closings. 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 Valuation Time. 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 are 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. |
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. |
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. |
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. |
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 may use 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 October 31, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. |
10
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. 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 may include but are not limited to losses deferred due to wash sale adjustments and short-term capital gain adjustments. 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) | 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 (“RIC”) 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) — Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments and short-term capital gain adjustments. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. |
11
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
c) | Distributions and Components of Distributable Earnings — 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, 2009 | ||||
Ordinary Income | $ | 33 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 10 | ||
Unrealized Appreciation * | 479 | |||
Total Accumulated Earnings | $ | 489 | ||
* | The differences between book-basis and tax-basis unrealized appreciation (depreciation) may be attributable to the losses deferred due to wash sale adjustments and short-term capital gain adjustments. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated net realized loss on investments by $1 and increase paid-in-capital by $1. | ||
e) | Capital Loss Carryforward — The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2009. | ||
f) | Accounting for Uncertainty in Income Taxes — Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 | % |
12
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 services 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 year ended October 31, 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 a Distribution and Service Plan 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. | |||
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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated in an amount that rounds to zero for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
13
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
5. | Affiliate Holdings: | |
As of October 31, 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 year ended October 31, 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 | $ | 3,468 | ||
Sales Proceeds Excluding U.S. Government Obligations | 235 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and for the one-day period ended October 31, 2008: |
For the Year Ended October 31, 2009 | For the One-Day Period 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 R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 10 | 1 | — | — | 11 | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | 118 | $ | 11 | $ | (5 | ) | $ | — | $ | 124 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 8 | 1 | — | — | 9 | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | 89 | $ | 11 | $ | — | $ | — | $ | 100 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | ||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 3 | 1 | (1 | ) | — | 3 | 100 | — | — | — | 100 | |||||||||||||||||||||||||||||
Amount | $ | 25 | $ | 11 | $ | (13 | ) | $ | — | $ | 23 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
14
15
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008 through October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.12 | $ | — | $ | 1.57 | $ | 1.69 | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | 1.58 | $ | 11.58 | ||||||||||||||||||||
R4 | 10.00 | 0.15 | — | 1.57 | 1.72 | (0.11 | ) | — | — | (0.11 | ) | 1.61 | 11.61 | |||||||||||||||||||||||||||||||
R5 | 10.00 | 0.16 | — | 1.56 | 1.72 | (0.11 | ) | — | — | (0.11 | ) | 1.61 | 11.61 |
(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 and the complete redemption of the investment at net asset value at the end of each period. | |
(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. |
16
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||
Net Assets at | Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net | ||||||||||||||||||||
End of Period | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Rate(d) | ||||||||||||||||||
17.18% | $ | 1,285 | 2.42 | % | 0.39 | % | 0.39 | % | 1.23 | % | 8 | % | ||||||||||||
17.54 | 1,262 | 2.13 | 0.09 | 0.09 | 1.53 | — | ||||||||||||||||||
17.55 | 1,190 | 1.83 | 0.04 | 0.04 | 1.56 | — |
17
The Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
18
19
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. |
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp. |
* | 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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. |
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 from 2005 — 2006. |
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 — 2009. |
20
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987. |
Mr. Sloane is a Senior Vice President of Hartford Life. 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. |
21
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class R3 | 0.108 | N/A | N/A | 0.108 | ||||||||||||
Class R4 | 0.113 | N/A | N/A | 0.113 | ||||||||||||
Class R5 | 0.113 | N/A | N/A | 0.113 |
22
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,211.30 | $ | 2.23 | $ | 1,000.00 | $ | 1,023.19 | $ | 2.04 | 0.40 | % | 184 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,213.20 | $ | 0.50 | $ | 1,000.00 | $ | 1,024.75 | $ | 0.46 | 0.09 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,213.20 | $ | 0.28 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | 184 | 365 |
23
24
25
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
26
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Total Return Bond Fund |
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
15 | ||||
16 | ||||
17 | ||||
18 | ||||
19 | ||||
34 | ||||
36 | ||||
37 | ||||
39 | ||||
39 | ||||
40 | ||||
41 | ||||
42 | ||||
43 |
(subadvised by Hartford Investment Management Company) | Investment objective — Seeks a competitive total return, with | |
income as a secondary objective. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | 10 | ||||||||||
Year | Year | Year | ||||||||||
Total Return Bond A# | 16.38 | % | 3.27 | % | 5.42 | % | ||||||
Total Return Bond A## | 11.14 | % | 2.33 | % | 4.94 | % | ||||||
Total Return Bond B# | 15.60 | % | 2.52 | % | NA | * | ||||||
Total Return Bond B## | 10.60 | % | 2.18 | % | NA | * | ||||||
Total Return Bond C# | 15.61 | % | 2.53 | % | 4.70 | % | ||||||
Total Return Bond C## | 14.61 | % | 2.53 | % | 4.70 | % | ||||||
Total Return Bond I# | 16.78 | % | 3.50 | % | 5.53 | % | ||||||
Total Return Bond R3# | 16.19 | % | 3.36 | % | 5.71 | % | ||||||
Total Return Bond R4# | 16.39 | % | 3.50 | % | 5.78 | % | ||||||
Total Return Bond R5# | 16.86 | % | 3.66 | % | 5.86 | % | ||||||
Total Return Bond Y# | 16.87 | % | 3.71 | % | 5.89 | % | ||||||
Barclays Capital U.S. Aggregate Bond Index | 13.79 | % | 5.05 | % | 6.31 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. | |
(5) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Classes R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. |
Nasri Toutoungi
Managing Director
2
as of October 31, 2009
Percentage of | ||||
Long Term | ||||
Rating | Holdings | |||
AAA | 58 .0 | % | ||
AA | 5 .6 | |||
A | 13 .0 | |||
BBB | 12 .0 | |||
BB | 4 .6 | |||
B | 3 .6 | |||
CCC | 0 .8 | |||
Not Rated | 2 .4 | |||
Total | 100.0 | % | ||
as of October 31, 2009
Percentage of | ||||
Category | Net Assets | |||
Affiliated Investment Companies | 1 .2 | % | ||
Asset & Commercial Mortgage Backed Securities | 7 .9 | |||
Call Options Purchased | 0 .1 | |||
Corporate Bonds: Investment Grade | 32 .1 | |||
Corporate Bonds: Non-Investment Grade | 5 .7 | |||
Municipal Bonds | 1 .0 | |||
Preferred Stocks | 0 .0 | |||
Put Options Purchased | 0 .0 | |||
Senior Floating Rate Interests: Non-Investment Grade | 2 .9 | |||
U.S. Government Agencies | 27 .1 | |||
U.S. Government Securities | 19 .6 | |||
Short-Term Investments | 7 .7 | |||
Other Assets and Liabilities | (5 .3 | ) | ||
Total | 100.0 | % | ||
3
as of October 31, 2009
Percentage of | ||||
Industry | Net Assets | |||
Fixed Income Securities | ||||
Accommodation and Food Services | 0.3 | % | ||
Administrative Waste Management and Remediation | 0.6 | |||
Air Transportation | 0.0 | |||
Arts, Entertainment and Recreation | 1.5 | |||
Beverage and Tobacco Product Manufacturing | 1.1 | |||
Chemical Manufacturing | 1.0 | |||
Computer and Electronic Product Manufacturing | 0.1 | |||
Construction | 0.2 | |||
Educational Services | 0.1 | |||
Finance and Insurance | 18.5 | |||
Food Manufacturing | 0.3 | |||
Food Services | 0.0 | |||
Foreign Governments | 5.7 | |||
General Obligations | 0.3 | |||
Health Care and Social Assistance | 2.0 | |||
Higher Education (Univ., Dorms, etc.) | 0.2 | |||
Information | 4.6 | |||
Machinery Manufacturing | 0.1 | |||
Mining | 1.3 | |||
Miscellaneous Manufacturing | 0.8 | |||
Motor Vehicle & Parts Manufacturing | 0.1 | |||
Nonmetallic Mineral Product Manufacturing | 0.1 | |||
Paper Manufacturing | 0.3 | |||
Petroleum and Coal Products Manufacturing | 2.8 | |||
Pipeline Transportation | 1.0 | |||
Plastics and Rubber Products Manufacturing | 0.0 | |||
Primary Metal Manufacturing | 0.5 | |||
Printing and Related Support Activities | 0.1 | |||
Professional, Scientific and Technical Services | 0.3 | |||
Rail Transportation | 0.1 | |||
Real Estate and Rental and Leasing | 0.6 | |||
Retail Trade | 0.5 | |||
Soap, Cleaning Compound and Toilet Manufacturing | 0.1 | |||
Transit and Ground Passenger Transportation | 0.0 | |||
Transportation | 0.5 | |||
U.S. Government Agencies | 27.1 | |||
U.S. Government Securities | 19.6 | |||
Utilities | 3.9 | |||
Other Securities | ||||
Banks | 0.0 | |||
Diversified Financials | 1.2 | |||
Long Call Future Option Contract | 0.1 | |||
Long Put Future Option Contract | 0.0 | |||
Short-Term Investments | 7.7 | |||
Other Assets and Liabilities | (5.3 | ) | ||
Total | 100.0 | % | ||
4
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
AFFILIATED INVESTMENT COMPANIES - 1.2% | ||||||||
FIXED INCOME FUNDS - 1.2% | ||||||||
936 | The Hartford Floating Rate Fund, Class Y | $ | 7,761 | |||||
2,328 | The Hartford High Yield Fund, Class Y | 15,667 | ||||||
Total fixed income funds (cost $21,861) | $ | 23,428 | ||||||
Total investments in affiliated investment companies (cost $21,861) | $ | 23,428 | ||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 7.9% | ||||||||
Finance and Insurance - 7.9% | ||||||||
Ally Automotive Receivables Trust | ||||||||
$ | 950 | 3.00%, 10/15/2015 ■ | $ | 956 | ||||
Banc of America Commercial Mortgage, Inc. | ||||||||
13,599 | 4.52%, 09/11/2036 ⌂► | 73 | ||||||
Bank of America Automotive Trust | ||||||||
3,400 | 3.03%, 10/15/2016 ■ | 3,443 | ||||||
Bayview Commercial Asset Trust | ||||||||
18,571 | 7.50%, 09/25/2037 ⌂► | 1,489 | ||||||
Bear Stearns Commercial Mortgage Securities, Inc. | ||||||||
9,017 | 4.07%, 07/11/2042 ⌂► | 179 | ||||||
8,397 | 4.12%, 11/11/2041 ⌂► | 130 | ||||||
4,200 | 4.83%, 11/11/2041 | 4,166 | ||||||
4,060 | 5.12%, 02/11/2041 ∆ | 4,021 | ||||||
4,310 | 5.90%, 09/11/2038 ∆ | 4,392 | ||||||
CBA Commercial Small Balance Commercial Mortgage | ||||||||
23,571 | 7.00%, 07/25/2035 - 06/25/2038 ⌂►† | 1,538 | ||||||
Chase Issuance Trust | ||||||||
2,660 | 5.12%, 10/15/2014 | 2,887 | ||||||
Citibank Credit Card Issuance Trust | ||||||||
1,120 | 5.70%, 05/15/2013 | 1,149 | ||||||
Citigroup Commercial Mortgage Trust | ||||||||
7,735 | 5.41%, 10/15/2049 | 7,814 | ||||||
2,130 | 5.89%, 12/10/2049 ∆ | 1,560 | ||||||
Citigroup Mortgage Loan Trust, Inc. | ||||||||
— | 0.00%, 01/25/2037 ⌂† | — | ||||||
318 | 12.00%, 01/25/2037 ⌂ | 19 | ||||||
Commercial Mortgage Pass-Through Certificates | ||||||||
3,840 | 4.72%, 03/10/2039 | 3,803 | ||||||
3,185 | 5.23%, 07/10/2037 | 3,197 | ||||||
4,230 | 5.46%, 07/10/2037 ∆ | 4,245 | ||||||
Countrywide Asset-Backed Certificates | ||||||||
264 | 5.46%, 07/25/2035 | 109 | ||||||
Countrywide Home Loans, Inc. | ||||||||
8,507 | 6.00%, 10/25/2037 ⌂ | 7,080 | ||||||
Credit-Based Asset Servicing and Securitization | ||||||||
723 | 0.51%, 05/25/2036 ■∆ | 449 | ||||||
1,125 | 5.86%, 04/25/2037 | 608 | ||||||
CS First Boston Mortgage Securities Corp. | ||||||||
1,790 | 5.23%, 12/15/2040 | 1,780 | ||||||
Daimler Chrysler Automotive Trust | ||||||||
900 | 4.71%, 09/10/2012 ∆ | 929 | ||||||
GE Business Loan Trust | ||||||||
1,699 | 1.29%, 05/15/2034 ■∆ | 391 | ||||||
26,865 | 6.14%, 05/15/2034 ⌂► | 73 | ||||||
GE Capital Commercial Mortgage Corp. | ||||||||
2,480 | 5.05%, 07/10/2045 ∆ | 2,494 | ||||||
Goldman Sachs Mortgage Securities Corp. II | ||||||||
19,922 | 4.38%, 08/10/2038 ⌂► | 97 | ||||||
Green Tree Financial Corp. | ||||||||
182 | 7.24%, 06/15/2028 | 183 | ||||||
Greenwich Capital Commercial Funding Corp. | ||||||||
6,630 | 4.80%, 08/10/2042 | 6,330 | ||||||
3,465 | 5.44%, 03/10/2039 ∆ | 3,092 | ||||||
4,250 | 6.12%, 07/10/2038 ∆ | 4,075 | ||||||
JP Morgan Automotive Receivable Trust | ||||||||
385 | 12.85%, 03/15/2012 ⌂† | 97 | ||||||
JP Morgan Chase Commercial Mortgage Securities Corp. | ||||||||
2,036 | 4.72%, 01/15/2038 | 2,003 | ||||||
71,959 | 4.82%, 08/12/2037 ► | 154 | ||||||
5,035 | 5.04%, 03/15/2046 ∆ | 5,035 | ||||||
3,935 | 5.34%, 12/15/2044 ∆ | 3,951 | ||||||
3,390 | 5.34%, 05/15/2047 | 3,051 | ||||||
1,740 | 5.40%, 05/15/2045 | 1,615 | ||||||
80,796 | 5.42%, 05/12/2045 ► | 1,219 | ||||||
4,650 | 5.47%, 04/15/2043 ∆ | 4,520 | ||||||
LB-UBS Commercial Mortgage Trust | ||||||||
2,647 | 4.48%, 10/15/2029 | 2,587 | ||||||
19,742 | 5.26%, 09/15/2039 ⌂► | 399 | ||||||
3,850 | 5.88%, 06/15/2038 ∆ | 3,796 | ||||||
Lehman Brothers Small Balance Commercial | ||||||||
791 | 5.52%, 09/25/2030 ■ | 540 | ||||||
1,100 | 5.62%, 09/25/2036 ■ | 912 | ||||||
Marlin Leasing Receivables LLC | ||||||||
1,484 | 5.33%, 09/16/2013 ■ | 1,482 | ||||||
Merrill Lynch Mortgage Trust | ||||||||
864 | 5.83%, 06/12/2050 ∆ | 741 | ||||||
1,776 | 6.02%, 06/12/2050 ∆ | 1,274 | ||||||
Merrill Lynch/Countrywide Commercial Mortgage Trust | ||||||||
19,750 | 5.27%, 07/12/2046 ⌂► | 470 | ||||||
2,070 | 5.38%, 08/12/2048 | 1,626 | ||||||
Morgan Stanley Capital I | ||||||||
4,160 | 4.70%, 07/15/2056 | 4,109 | ||||||
4,050 | 5.01%, 01/14/2042 | 4,103 | ||||||
5,560 | 5.23%, 09/15/2042 | 5,555 | ||||||
Morgan Stanley Dean Witter Capital I | ||||||||
2,756 | 0.00%, 08/25/2032 ⌂►† | — | ||||||
Nationstar Home Equity Loan Trust | ||||||||
48 | 0.00%, 03/25/2037 ⌂• | — | ||||||
North Street Referenced Linked Notes | ||||||||
850 | 1.33%, 04/28/2011 ⌂†∆ | 92 | ||||||
Popular ABS Mortgage Pass-Through Trust | ||||||||
619 | 4.75%, 12/25/2034 | 583 | ||||||
437 | 5.42%, 04/25/2035 ⌂ | 194 |
5
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 7.9% — (continued) | ||||||||
Finance and Insurance - 7.9% — (continued) | ||||||||
Renaissance Home Equity Loan Trust | ||||||||
$ | 611 | 5.36%, 05/25/2035 | $ | 261 | ||||
3,520 | 5.58%, 11/25/2036 ∆ | 3,088 | ||||||
1,230 | 5.75%, 05/25/2036 ∆ | 951 | ||||||
Residential Funding Mortgage Securities, Inc. | ||||||||
5,126 | 6.00%, 07/25/2037 | 4,343 | ||||||
Sovereign Commercial Mortgage Securities | ||||||||
5,469 | 5.79%, 07/22/2030 ■∆ | 5,408 | ||||||
Swift Master Automotive Receivables Trust | ||||||||
4,225 | 0.89%, 10/15/2012 ∆ | 4,140 | ||||||
Wachovia Bank Commercial Mortgage Trust | ||||||||
3,690 | 5.31%, 11/15/2048 | 3,570 | ||||||
4,193 | 5.34%, 12/15/2043 | 3,234 | ||||||
3,850 | 5.41%, 07/15/2041 ∆ | 3,877 | ||||||
Wamu Commercial Mortgage Securities Trust | ||||||||
4,760 | 0.00%, 03/23/2045 ■• | 1,605 | ||||||
Wells Fargo Alternative Loan Trust | ||||||||
3,529 | 6.25%, 11/25/2037 ⌂ | 2,589 | ||||||
155,925 | ||||||||
Total asset & commercial mortgage backed securities (cost $151,636) | $ | 155,925 | ||||||
CORPORATE BONDS: INVESTMENT GRADE - 32.1% | ||||||||
Administrative Waste Management and Remediation - 0.5% | ||||||||
Allied Waste North America, Inc. | ||||||||
$ | 8,263 | 7.25%, 03/15/2015 ‡ | $ | 8,687 | ||||
Browning-Ferris Industries, Inc. | ||||||||
1,770 | 7.40%, 09/15/2035 | 2,035 | ||||||
10,722 | ||||||||
Air Transportation - 0.0% | ||||||||
Continental Airlines, Inc. | ||||||||
18 | 8.05%, 11/01/2020 | 18 | ||||||
Arts, Entertainment and Recreation - 0.8% | ||||||||
DirecTV Holdings LLC | ||||||||
4,420 | 4.75%, 10/01/2014 ■ | 4,509 | ||||||
2,525 | 7.63%, 05/15/2016 ‡ | 2,740 | ||||||
News America Holdings, Inc. | ||||||||
1,529 | 5.65%, 08/15/2020 ■ | 1,584 | ||||||
News America, Inc. | ||||||||
1,269 | 6.90%, 08/15/2039 ■ | 1,345 | ||||||
Time Warner Entertainment Co., L.P. | ||||||||
4,215 | 8.38%, 07/15/2033 | 5,055 | ||||||
15,233 | ||||||||
Beverage and Tobacco Product Manufacturing - 1.1% | ||||||||
Altria Group, Inc. | ||||||||
3,536 | 10.20%, 02/06/2039 | 4,714 | ||||||
Anheuser-Busch Cos., Inc. | ||||||||
2,000 | 8.20%, 01/15/2039 ■ | 2,523 | ||||||
Anheuser-Busch InBev N.V. | ||||||||
3,978 | 4.13%, 01/15/2015 ■ | 4,011 | ||||||
8,255 | 7.75%, 01/15/2019 ■ | 9,620 | ||||||
20,868 | ||||||||
Chemical Manufacturing - 0.6% | ||||||||
Dow Chemical Co. | ||||||||
7,375 | 8.55%, 05/15/2019 ‡ | 8,419 | ||||||
Yara International ASA | ||||||||
2,775 | 7.88%, 06/11/2019 ■ | 3,163 | ||||||
11,582 | ||||||||
Construction - 0.2% | ||||||||
CRH America, Inc. | ||||||||
2,800 | 5.30%, 10/15/2013 | 2,909 | ||||||
1,520 | 8.13%, 07/15/2018 | 1,755 | ||||||
4,664 | ||||||||
Educational Services - 0.1% | ||||||||
President & Fellows of Harvard | ||||||||
2,220 | 6.00%, 01/15/2019 ■ | 2,511 | ||||||
Finance and Insurance - 10.2% | ||||||||
ABX Financing Co. | ||||||||
1,200 | 6.35%, 10/15/2036 ■ | 1,249 | ||||||
American Express Centurion Bank | ||||||||
4,000 | 5.95%, 06/12/2017 | 4,112 | ||||||
American Express Co. | ||||||||
2,547 | 5.50%, 04/16/2013 | 2,706 | ||||||
3,463 | 5.55%, 10/17/2012 | 3,697 | ||||||
American General Finance Corp. | ||||||||
4,055 | 6.90%, 12/15/2017 | 2,822 | ||||||
Amvescap plc | ||||||||
1,001 | 5.38%, 02/27/2013 | 1,014 | ||||||
Army Hawaii Family Housing Trust Certificates | ||||||||
915 | 5.52%, 06/15/2050 ■ | 653 | ||||||
BAC Capital Trust XI | ||||||||
810 | 6.63%, 05/23/2036 | 697 | ||||||
BAE Systems Holdings, Inc. | ||||||||
4,894 | 5.20%, 08/15/2015 ■ | 5,100 | ||||||
Bank of America Corp. | ||||||||
5,905 | 5.65%, 05/01/2018 ‡ | 5,968 | ||||||
5,270 | 6.50%, 08/01/2016 | 5,638 | ||||||
2,630 | 7.38%, 05/15/2014 ‡ | 2,945 | ||||||
Barclays Bank plc | ||||||||
4,490 | 5.00%, 09/22/2016 ‡ | 4,589 | ||||||
4,905 | 6.05%, 12/04/2017 ■ | 4,997 | ||||||
Capital One Bank | ||||||||
4,205 | 8.80%, 07/15/2019 ‡ | 4,981 | ||||||
Citigroup, Inc. | ||||||||
3,885 | 2.13%, 04/30/2012 ‡ | 3,959 | ||||||
3,508 | 6.38%, 08/12/2014 ‡ | 3,721 | ||||||
3,740 | 8.13%, 07/15/2039 ‡ | 4,352 | ||||||
1,415 | 8.30%, 12/21/2057 ∆ | 1,309 | ||||||
5,853 | 8.50%, 05/22/2019 ‡ | 6,842 | ||||||
Comerica Capital Trust II | ||||||||
1,462 | 6.58%, 02/20/2037 ∆ | 1,053 | ||||||
Commonwealth Bank of Australia | ||||||||
4,972 | 5.00%, 10/15/2019 ■ | 4,994 | ||||||
Corpoacion Andina De Fomento | ||||||||
215 | 8.13%, 06/04/2019 | 256 |
6
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - 32.1% — (continued) | ||||||||
Finance and Insurance - 10.2% — (continued) | ||||||||
Credit Agricole S.A. | ||||||||
$ | 5,009 | 6.64%, 05/31/2017 ■‡♠∆ | $ | 3,957 | ||||
First Union Capital I | ||||||||
1,595 | 7.94%, 01/15/2027 | 1,557 | ||||||
Goldman Sachs Capital Trust II | ||||||||
5,092 | 5.79%, 06/01/2012 ♠∆ | 3,787 | ||||||
Goldman Sachs Group, Inc. | ||||||||
2,448 | 6.35%, 02/15/2034 | 2,319 | ||||||
Guardian Life Insurance Co. | ||||||||
3,608 | 7.38%, 09/30/2039 ■ | 3,647 | ||||||
Iberdrola Finance Ireland | ||||||||
3,592 | 5.00%, 09/11/2019 ■ | 3,622 | ||||||
Jefferies Group, Inc. | ||||||||
3,183 | 8.50%, 07/15/2019 | 3,457 | ||||||
JP Morgan Chase & Co. | ||||||||
2,666 | 3.70%, 01/20/2015 | 2,678 | ||||||
4,430 | 6.30%, 04/23/2019 | 4,862 | ||||||
JP Morgan Chase Capital II | ||||||||
1,485 | 0.98%, 02/01/2027 ∆ | 1,056 | ||||||
JP Morgan Chase Capital XXV | ||||||||
3,964 | 6.80%, 10/01/2037 | 3,897 | ||||||
Massachusetts Mutual Life Insurance Co. | ||||||||
2,438 | 8.88%, 06/01/2039 ■ | 2,970 | ||||||
Mellon Capital IV | ||||||||
5,444 | 6.24%, 06/20/2012 ♠∆ | 4,260 | ||||||
Metlife, Inc. | ||||||||
220 | 5.38%, 12/15/2012 | 237 | ||||||
Metropolitan Life Global Funding I | ||||||||
4,290 | 0.55%, 03/15/2012 ■∆ | 4,176 | ||||||
1,400 | 5.13%, 06/10/2014 ■ | 1,487 | ||||||
Morgan Stanley | ||||||||
4,040 | 5.38%, 10/15/2015 | 4,191 | ||||||
5,045 | 7.30%, 05/13/2019 | 5,652 | ||||||
National City Bank of Ohio | ||||||||
800 | 4.50%, 03/15/2010 | 809 | ||||||
New York Life Insurance Co. | ||||||||
3,766 | 6.75%, 11/15/2039 ■ | 3,819 | ||||||
Northgroup Preferred Capital Corp. | ||||||||
2,685 | 6.38%, 10/15/2017 ■♠∆ | 2,328 | ||||||
PNC Preferred Funding Trust II | ||||||||
6,700 | 6.11%, 03/15/2012 ■♠∆ | 4,535 | ||||||
Progressive Corp. | ||||||||
1,615 | 6.70%, 06/15/2037 ∆ | 1,414 | ||||||
Prudential Financial, Inc. | ||||||||
7,083 | 4.75%, 09/17/2015 | 7,108 | ||||||
2,404 | 5.15%, 01/15/2013 | 2,523 | ||||||
2,240 | 7.38%, 06/15/2019 | 2,503 | ||||||
Rabobank Netherlands | ||||||||
1,609 | 11.00%, 06/30/2019 ■♠ | 2,019 | ||||||
Simon Property Group L.P. | ||||||||
2,581 | 6.75%, 05/15/2014 | 2,777 | ||||||
State Street Capital Trust III | ||||||||
7,723 | 8.25%, 03/15/2042 ∆ | 7,790 | ||||||
SunTrust Banks, Inc. | ||||||||
1,265 | 0.53%, 05/21/2012 ∆ | 1,198 | ||||||
3,625 | 0.70%, 08/24/2015 ∆ | 2,922 | ||||||
Svenska Handelsbanken AB | ||||||||
4,675 | 4.88%, 06/10/2014 ■ | 4,907 | ||||||
Temasek Financial I Ltd. | ||||||||
7,840 | 4.30%, 10/25/2019 ■ | 7,744 | ||||||
UBS AG Stamford | ||||||||
3,950 | 5.88%, 12/20/2017 | 4,057 | ||||||
USB Capital IX | ||||||||
1,384 | 6.19%, 04/15/2011 ♠∆ | 1,062 | ||||||
Wells Fargo Bank NA | ||||||||
6,385 | 0.65%, 05/16/2016 ∆ | 5,522 | ||||||
ZFS Finance USA Trust I | ||||||||
939 | 6.50%, 05/09/2037 ■∆ | 760 | ||||||
201,263 | ||||||||
Food Services - 0.0% | ||||||||
Arcos Dorados S.A. | ||||||||
700 | 7.50%, 10/01/2019 ■ | 676 | ||||||
Foreign Governments - 5.2% | ||||||||
Banco Nacional De Desenvolvimento | ||||||||
860 | 6.50%, 06/10/2019 ■ | 905 | ||||||
Brazil (Republic of) | ||||||||
1,213 | 8.00%, 01/15/2018 | 1,385 | ||||||
Colombia (Republic of) | ||||||||
1,450 | 7.38%, 03/18/2019 ‡ | 1,640 | ||||||
Deutsche Bundesrepublik | ||||||||
EUR | 23,550 | 3.75%, 01/04/2015 | 36,693 | |||||
France (Government of) | ||||||||
EUR | 22,810 | 3.75%, 10/25/2019 | 34,102 | |||||
Hungary (Republic of) | ||||||||
1,955 | 4.75%, 02/03/2015 | 1,936 | ||||||
Japanese Government | ||||||||
JPY | 1,583,500 | 0.40%, 03/15/2011 | 17,632 | |||||
Peru (Republic of) | ||||||||
1,115 | 6.55%, 03/14/2037 | 1,160 | ||||||
1,305 | 7.13%, 03/30/2019 | 1,481 | ||||||
Russian Federation Government | ||||||||
1,691 | 7.50%, 03/31/2030 § | 1,881 | ||||||
South Africa (Republic of) | ||||||||
1,675 | 5.88%, 05/30/2022 | 1,763 | ||||||
United Mexican States | ||||||||
1,680 | 5.95%, 03/19/2019 | 1,756 | ||||||
102,334 | ||||||||
Health Care and Social Assistance - 1.2% | ||||||||
Amgen, Inc. | ||||||||
1,659 | 6.40%, 02/01/2039 | 1,893 | ||||||
CVS Caremark Corp. | ||||||||
2,911 | 6.30%, 06/01/2037 ‡∆ | 2,504 | ||||||
CVS Corp. | ||||||||
3,919 | 8.35%, 07/10/2031 ■ | 4,450 | ||||||
Pfizer, Inc. | ||||||||
3,720 | 6.20%, 03/15/2019 | 4,235 | ||||||
3,870 | 7.20%, 03/15/2039 | 4,863 | ||||||
Roche Holdings, Inc. | ||||||||
3,730 | 5.00%, 03/01/2014 ■ | 4,040 | ||||||
1,796 | 7.00%, 03/01/2039 ■ | 2,207 | ||||||
24,192 | ||||||||
Information - 2.7% | ||||||||
AT&T, Inc. | ||||||||
3,410 | 6.55%, 02/15/2039 ‡ | 3,689 | ||||||
Cingular Wireless Services, Inc. | ||||||||
4,780 | 8.75%, 03/01/2031 ‡ | 6,303 | ||||||
Qwest Corp. | ||||||||
1,480 | 7.20%, 11/10/2026 | 1,258 | ||||||
3,330 | 7.25%, 10/15/2035 | 2,764 |
7
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - 32.1% — (continued) | ||||||||
Information - 2.7% — (continued) | ||||||||
Rogers Cable, Inc. | ||||||||
$ | 855 | 8.75%, 05/01/2032 | $ | 1,098 | ||||
Rogers Wireless, Inc. | ||||||||
2,872 | 6.38%, 03/01/2014 | 3,176 | ||||||
TCI Communications, Inc. | ||||||||
685 | 8.75%, 08/01/2015 | 817 | ||||||
Telecom Italia Capital | ||||||||
2,054 | 7.18%, 06/18/2019 | 2,277 | ||||||
4,515 | 7.72%, 06/04/2038 | 5,236 | ||||||
Telefonica Emisiones SAU | ||||||||
3,888 | 4.95%, 01/15/2015 | 4,117 | ||||||
Time Warner Cable, Inc. | ||||||||
2,406 | 8.25%, 04/01/2019 | 2,894 | ||||||
Verizon Communications, Inc. | ||||||||
3,364 | 6.90%, 04/15/2038 | 3,802 | ||||||
Verizon Virginia, Inc. | ||||||||
4,370 | 4.63%, 03/15/2013 | 4,568 | ||||||
Verizon Wireless | ||||||||
6,858 | 5.55%, 02/01/2014 ■ | 7,473 | ||||||
3,108 | 8.50%, 11/15/2018 ■ | 3,872 | ||||||
53,344 | ||||||||
Mining - 1.1% | ||||||||
Anglo American Capital plc | ||||||||
6,879 | 9.38%, 04/08/2014 - 04/08/2019 ■ | 8,066 | ||||||
Barrick Australia Finance | ||||||||
3,685 | 5.95%, 10/15/2039 ■ | 3,600 | ||||||
Barrick Gold Corp. | ||||||||
3,065 | 6.95%, 04/01/2019 | 3,499 | ||||||
Rio Tinto Finance USA Ltd. | ||||||||
4,450 | 5.88%, 07/15/2013 | 4,796 | ||||||
1,935 | 9.00%, 05/01/2019 | 2,407 | ||||||
22,368 | ||||||||
Miscellaneous Manufacturing - 0.7% | ||||||||
L-3 Communications Corp. | ||||||||
2,317 | 5.20%, 10/15/2019 ■ | 2,340 | ||||||
Meccanica Holdings USA, Inc. | ||||||||
6,528 | 6.25%, 07/15/2019 - 01/15/2040 ■ | 6,767 | ||||||
Tyco International Ltd. | ||||||||
3,426 | 8.50%, 01/15/2019 | 4,178 | ||||||
13,285 | ||||||||
Nonmetallic Mineral Product Manufacturing - 0.1% | ||||||||
Holcim Ltd. | ||||||||
1,456 | 6.00%, 12/30/2019 ■ | 1,501 | ||||||
Petroleum and Coal Products Manufacturing - 2.6% | ||||||||
Canadian Natural Resources Ltd. | ||||||||
391 | 6.25%, 03/15/2038 | 414 | ||||||
3,405 | 6.50%, 02/15/2037 ‡ | 3,697 | ||||||
Cenovus Energy Inc. | ||||||||
4,062 | 5.70%, 10/15/2019 ■ | 4,221 | ||||||
ConocoPhillips | ||||||||
3,346 | 6.50%, 02/01/2039 ‡ | 3,745 | ||||||
Consumers Energy Co. | ||||||||
1,460 | 5.15%, 02/15/2017 | 1,519 | ||||||
1,595 | 5.38%, 04/15/2013 | 1,716 | ||||||
2,240 | 6.70%, 09/15/2019 ‡ | 2,573 | ||||||
Diamond Offshore Drilling, Inc. | ||||||||
3,324 | 5.70%, 10/15/2039 | 3,245 | ||||||
EnCana Corp. | ||||||||
815 | 6.50%, 05/15/2019 | 905 | ||||||
Husky Energy, Inc. | ||||||||
1,173 | 7.25%, 12/15/2019 | 1,356 | ||||||
Kazmunaigaz Finance Sub B.V. | ||||||||
1,515 | 8.38%, 07/02/2013 § | 1,602 | ||||||
Nabors Industries, Inc. | ||||||||
2,712 | 9.25%, 01/15/2019 | 3,276 | ||||||
Occidental Petroleum Corp. | ||||||||
3,679 | 4.13%, 06/01/2016 | 3,784 | ||||||
Petrobras International Finance Co. | ||||||||
2,200 | 5.75%, 01/20/2020 | 2,193 | ||||||
2,175 | 6.88%, 01/20/2040 | 2,173 | ||||||
Petro-Canada | ||||||||
4,295 | 5.95%, 05/15/2035 | 4,214 | ||||||
Sempra Energy | ||||||||
2,096 | 6.50%, 06/01/2016 | 2,302 | ||||||
3,413 | 9.80%, 02/15/2019 | 4,355 | ||||||
TNK-BP Finance S.A. | ||||||||
1,100 | 6.63%, 03/20/2017 § | 1,049 | ||||||
Valero Energy Corp. | ||||||||
2,786 | 9.38%, 03/15/2019 | 3,297 | ||||||
51,636 | ||||||||
Pipeline Transportation - 0.8% | ||||||||
Enbridge Energy Partners | ||||||||
2,106 | 6.50%, 04/15/2018 | 2,263 | ||||||
Enterprise Products Operations LLC | ||||||||
4,122 | 6.50%, 01/31/2019 ‡ | 4,552 | ||||||
Kinder Morgan Energy Partners L.P. | ||||||||
3,240 | 5.63%, 02/15/2015 | 3,477 | ||||||
2,175 | 6.50%, 02/01/2037 | 2,194 | ||||||
450 | 6.95%, 01/15/2038 | 482 | ||||||
TransCanada Pipelines Ltd. | ||||||||
2,649 | 7.25%, 08/15/2038 | 3,219 | ||||||
16,187 | ||||||||
Primary Metal Manufacturing - 0.5% | ||||||||
Alcan, Inc. | ||||||||
672 | 6.13%, 12/15/2033 | 679 | ||||||
665 | 7.25%, 03/15/2031 | 742 | ||||||
ArcelorMittal | ||||||||
3,635 | 7.00%, 10/15/2039 | 3,437 | ||||||
4,330 | 9.00%, 02/15/2015 ‡ | 4,999 | ||||||
9,857 | ||||||||
Rail Transportation - 0.1% | ||||||||
Canadian Pacific Railway Co. | ||||||||
1,499 | 7.25%, 05/15/2019 | 1,729 | ||||||
Real Estate and Rental and Leasing - 0.5% | ||||||||
COX Communications, Inc. | ||||||||
1,718 | 6.25%, 06/01/2018 ■ | 1,807 | ||||||
2,105 | 8.38%, 03/01/2039 ■ | 2,524 | ||||||
ERAC USA Finance Co. | ||||||||
3,999 | 5.60%, 05/01/2015 ■‡ | 4,037 | ||||||
US Bank Realty Corp. | ||||||||
3,700 | 6.09%, 01/15/2012 ■♠∆ | 2,583 | ||||||
10,951 | ||||||||
Utilities - 3.1% | ||||||||
Alabama Power Co. | ||||||||
2,485 | 6.00%, 03/01/2039 | 2,728 |
8
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - 32.1% — (continued) | ||||||||
Utilities - 3.1% — (continued) | ||||||||
CenterPoint Energy Resources Corp. | ||||||||
$ | 2,325 | 6.13%, 11/01/2017 ‡ | $ | 2,427 | ||||
690 | 6.63%, 11/01/2037 | 698 | ||||||
CenterPoint Energy, Inc. | ||||||||
2,775 | 6.85%, 06/01/2015 | 2,913 | ||||||
Commonwealth Edison Co. | ||||||||
3,516 | 5.80%, 03/15/2018 ‡ | 3,795 | ||||||
Detroit Edison Co. | ||||||||
565 | 6.13%, 10/01/2010 | 591 | ||||||
Duke Energy Corp. | ||||||||
1,280 | 5.25%, 01/15/2018 | 1,368 | ||||||
1,339 | 6.35%, 08/15/2038 | 1,537 | ||||||
3,002 | 7.00%, 11/15/2018 ‡ | 3,568 | ||||||
EDP Finance B.V. | ||||||||
5,256 | 4.90%, 10/01/2019 ■ | 5,280 | ||||||
Electricite de France | ||||||||
3,960 | 6.95%, 01/26/2039 ■‡ | 4,799 | ||||||
Enel Finance International S.A. | ||||||||
3,332 | 3.88%, 10/07/2014 ■ | 3,370 | ||||||
3,758 | 6.00%, 10/07/2039 ■ | 3,844 | ||||||
Exelon Generation Co. LLC | ||||||||
3,033 | 6.25%, 10/01/2039 | 3,165 | ||||||
Florida Power Corp. | ||||||||
1,152 | 5.80%, 09/15/2017 | 1,267 | ||||||
Northeast Utilities | ||||||||
1,450 | 5.65%, 06/01/2013 | 1,498 | ||||||
Northern States Power Co. | ||||||||
1,170 | 6.25%, 06/01/2036 | 1,321 | ||||||
Pacific Gas & Electric Co. | ||||||||
1,655 | 5.63%, 11/30/2017 | 1,816 | ||||||
Pacific Gas & Electric Energy Recovery | ||||||||
Funding LLC | ||||||||
2,453 | 8.25%, 10/15/2018 | 3,085 | ||||||
PSEG Power | ||||||||
1,287 | 5.00%, 04/01/2014 | 1,350 | ||||||
Public Service Co. of Colorado | ||||||||
1,557 | 6.50%, 08/01/2038 | 1,848 | ||||||
Southern California Edison Co. | ||||||||
6,441 | 5.75%, 03/15/2014 | 7,177 | ||||||
Virginia Electric & Power Co. | ||||||||
1,627 | 5.10%, 11/30/2012 | 1,766 | ||||||
61,211 | ||||||||
Total corporate bonds: investment grade (cost $598,955) | $ | 636,132 | ||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 5.7% | ||||||||
Accommodation and Food Services - 0.3% | ||||||||
Harrah’s Operating Co., Inc. | ||||||||
$ | 1,420 | 11.25%, 06/01/2017 ■ | $ | 1,448 | ||||
MGM Mirage, Inc. | ||||||||
3,195 | 11.13%, 11/15/2017 ■ | 3,515 | ||||||
920 | 11.38%, 03/01/2018 ■ | 828 | ||||||
5,791 | ||||||||
Arts, Entertainment and Recreation - 0.4% | ||||||||
AMC Entertainment, Inc. | ||||||||
885 | 8.75%, 06/01/2019 | 907 | ||||||
First Data Corp. | ||||||||
4,470 | 9.88%, 09/24/2015 | 4,124 | ||||||
TL Acquisitions, Inc. | ||||||||
1,840 | 10.50%, 01/15/2015 ■ | 1,739 | ||||||
Virgin Media Finance plc | ||||||||
2,075 | 9.50%, 08/15/2016 | 2,194 | ||||||
8,964 | ||||||||
Chemical Manufacturing - 0.1% | ||||||||
Potlatch Corp. | ||||||||
1,900 | 12.50%, 12/01/2009 ⌂∆ | 1,901 | ||||||
Computer and Electronic Product Manufacturing - 0.1% | ||||||||
Seagate Technology International | ||||||||
1,490 | 10.00%, 05/01/2014 ■ | 1,654 | ||||||
Construction - 0.0% | ||||||||
Desarrolladora Homes S.A. | ||||||||
455 | 7.50%, 09/28/2015 | 441 | ||||||
Finance and Insurance - 0.4% | ||||||||
American General Finance Corp. | ||||||||
645 | 5.85%, 06/01/2013 | 483 | ||||||
Ford Motor Credit Co. | ||||||||
2,660 | 7.50%, 08/01/2012 | 2,590 | ||||||
Liberty Mutual Group, Inc. | ||||||||
1,825 | 10.75%, 06/15/2058 ■ | 1,916 | ||||||
LPL Holdings, Inc. | ||||||||
3,790 | 10.75%, 12/15/2015 ■ | 3,838 | ||||||
8,827 | ||||||||
Food Manufacturing - 0.1% | ||||||||
Smithfield Foods, Inc. | ||||||||
1,230 | 10.00%, 07/15/2014 ■ | 1,291 | ||||||
Foreign Governments - 0.5% | ||||||||
El Salvador (Republic of) | ||||||||
960 | 7.65%, 06/15/2035 § | 960 | ||||||
955 | 8.25%, 04/10/2032 § | 974 | ||||||
Indonesia (Republic of) | ||||||||
2,442 | 6.88%, 01/17/2018 § | 2,595 | ||||||
Philippines (Republic of) | ||||||||
580 | 6.38%, 10/23/2034 | 567 | ||||||
1,600 | 6.50%, 01/20/2020 | 1,698 | ||||||
464 | 8.38%, 06/17/2019 | 561 | ||||||
Venezuela (Republic of) | ||||||||
2,823 | 5.75%, 02/26/2016 § | 1,899 | ||||||
9,254 | ||||||||
Health Care and Social Assistance - 0.4% | ||||||||
Biomet, Inc. | ||||||||
1,990 | 10.38%, 10/15/2017 | 2,142 | ||||||
HCA, Inc. | ||||||||
4,810 | 9.25%, 11/15/2016 | 5,027 | ||||||
Rite Aid Corp. | ||||||||
1,560 | 9.50%, 06/15/2017 | 1,271 | ||||||
8,440 | ||||||||
Information - 1.2% | ||||||||
CSC Holdings, Inc. | ||||||||
1,550 | 8.50%, 04/15/2014 ■ | 1,637 | ||||||
Frontier Communications Corp. | ||||||||
930 | 8.25%, 05/01/2014 | 953 | ||||||
Intelsat Bermuda Ltd. | ||||||||
3,500 | 9.25%, 06/15/2016 ⌂ | 3,360 | ||||||
Intelsat Corp. | ||||||||
540 | 9.25%, 06/15/2016 | 549 |
9
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 5.7% — (continued) | ||||||||
Information — 1.2% — (continued) | ||||||||
Level 3 Financing, Inc. | ||||||||
$ | 1,965 | 12.25%, 03/15/2013 | $ | 2,048 | ||||
MetroPCS Wireless, Inc. | ||||||||
2,100 | 9.25%, 11/01/2014 | 2,116 | ||||||
Mobile Telesystems Finance S.A. | ||||||||
1,810 | 8.00%, 01/28/2012 § | 1,876 | ||||||
Sprint Capital Corp. | ||||||||
4,260 | 8.75%, 03/15/2032 | 3,685 | ||||||
Videotron Ltee | ||||||||
1,395 | 9.13%, 04/15/2018 | 1,510 | ||||||
Wind Acquisition Finance S.A. | ||||||||
3,030 | 11.75%, 07/15/2017 ■ | 3,424 | ||||||
Windstream Corp. | ||||||||
1,770 | 8.63%, 08/01/2016 | 1,819 | ||||||
22,977 | ||||||||
Machinery Manufacturing — 0.1% | ||||||||
Case New Holland, Inc. | ||||||||
1,550 | 7.75%, 09/01/2013 ■ | 1,538 | ||||||
Mining — 0.2% | ||||||||
Drummond Co., Inc. | ||||||||
680 | 7.38%, 02/15/2016 ■ | 622 | ||||||
Teck Resources Ltd. | ||||||||
2,820 | 10.75%, 05/15/2019 | 3,285 | ||||||
Vedanta Resources plc | ||||||||
955 | 9.50%, 07/18/2018 § | 946 | ||||||
4,853 | ||||||||
Paper Manufacturing — 0.1% | ||||||||
Georgia-Pacific LLC | ||||||||
1,445 | 8.25%, 05/01/2016 ■ | 1,532 | ||||||
Petroleum and Coal Products Manufacturing — 0.2% | ||||||||
Chesapeake Energy Corp. | ||||||||
1,415 | 7.00%, 08/15/2014 | 1,426 | ||||||
720 | 9.50%, 02/15/2015 | 779 | ||||||
Petrohawk Energy Corp. | ||||||||
1,545 | 7.88%, 06/01/2015 | 1,560 | ||||||
3,765 | ||||||||
Pipeline Transportation — 0.2% | ||||||||
Dynegy Holdings, Inc. | ||||||||
2,120 | 7.75%, 06/01/2019 | 1,786 | ||||||
El Paso Corp. | ||||||||
1,375 | 7.00%, 06/15/2017 | 1,376 | ||||||
3,162 | ||||||||
Printing and Related Support Activities — 0.1% | ||||||||
Harland Clarke Holdings | ||||||||
1,545 | 9.50%, 05/15/2015 | 1,410 | ||||||
Professional, Scientific and Technical Services — 0.3% | ||||||||
Affinion Group, Inc. | ||||||||
6,025 | 11.50%, 10/15/2015 ‡ | 6,296 | ||||||
Real Estate and Rental and Leasing — 0.1% | ||||||||
Hertz Corp. | ||||||||
2,640 | 8.88%, 01/01/2014 | 2,673 | ||||||
Retail Trade — 0.4% | ||||||||
Dollar General Corp. | ||||||||
2,265 | 10.63%, 07/15/2015 | 2,480 | ||||||
Federated Retail Holdings, Inc. | ||||||||
2,120 | 5.90%, 12/01/2016 | 1,956 | ||||||
Parkson Retail Group Ltd. | ||||||||
2,105 | 7.88%, 11/14/2011 | 2,174 | ||||||
Supervalu, Inc. | ||||||||
1,930 | 8.00%, 05/01/2016 | 1,964 | ||||||
8,574 | ||||||||
Transit and Ground Passenger Transportation — 0.0% | ||||||||
Grupo Senda Autotransporte | ||||||||
180 | 10.50%, 10/03/2015 ■ | 147 | ||||||
Utilities — 0.5% | ||||||||
AES Corp. | ||||||||
2,270 | 8.00%, 10/15/2017 ‡ | 2,281 | ||||||
AES El Salvador Trust | ||||||||
800 | 6.75%, 02/01/2016 § | 687 | ||||||
Calpine Corp. | ||||||||
2,150 | 7.25%, 10/15/2017 ■ | 2,026 | ||||||
Energy Future Holdings Corp. | ||||||||
4,270 | 10.88%, 11/01/2017 ‡ | 2,968 | ||||||
NRG Energy, Inc. | ||||||||
1,945 | 8.50%, 06/15/2019 | 1,969 | ||||||
9,931 | ||||||||
Total corporate bonds: non-investment grade (cost $109,379) | $ | 113,421 | ||||||
MUNICIPAL BONDS — 1.0% | ||||||||
General Obligations — 0.3% | ||||||||
Chicago Metropolitan Water Reclamation Dist | ||||||||
$ | 3,485 | 5.72%, 12/01/2038 | $ | 3,670 | ||||
Oregon School Boards Association, Taxable Pension | ||||||||
1,250 | 4.76%, 06/30/2028 | 1,099 | ||||||
4,769 | ||||||||
Higher Education (Univ., Dorms, etc.) — 0.2% | ||||||||
University of California | ||||||||
4,300 | 5.77%, 05/15/2043 | 4,493 | ||||||
Transportation — 0.5% | ||||||||
Bay Area Toll Auth | ||||||||
5,280 | 6.26%, 04/01/2049 ☼ | 5,331 | ||||||
North Texas Tollway Auth Rev | ||||||||
4,281 | 6.72%, 01/01/2049 | 4,664 | ||||||
9,995 | ||||||||
Total municipal bonds (cost $18,805) | $ | 19,257 | ||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE♦ — 2.9% | ||||||||
Administrative Waste Management and Remediation — 0.1% | ||||||||
Affinion Group, Inc. | ||||||||
$ | 1,658 | 2.74%, 10/17/2012 ± | $ | 1,585 | ||||
Brickman Group Holdings, Inc. | ||||||||
1,167 | 2.28%, 01/23/2014 ± | 1,095 | ||||||
2,680 | ||||||||
10
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT | ||||||||
GRADE♦ — 2.9% — (continued) | ||||||||
Arts, Entertainment and Recreation — 0.3% | ||||||||
Cedar Fair L.P. | ||||||||
$ | 259 | 2.24%, 08/30/2012 ± | $ | 248 | ||||
940 | 4.24%, 12/31/2014 ± | 909 | ||||||
Cengage | ||||||||
627 | 2.75%, 07/05/2014 ± | 542 | ||||||
Cenveo, Inc., Delayed Draw Term Loan | ||||||||
27 | 4.79%, 06/21/2013 ± | 26 | ||||||
Cenveo, Inc., Term Loan C | ||||||||
1,305 | 4.79%, 06/21/2013 ± | 1,265 | ||||||
R.H. Donnelley, Inc. | ||||||||
1,165 | 6.75%, 10/24/2014 ±Ψ | 1,009 | ||||||
Regal Cinemas, Inc. | ||||||||
1,480 | 4.03%, 10/27/2013 ± | 1,462 | ||||||
5,461 | ||||||||
Chemical Manufacturing — 0.3% | ||||||||
Ashland, Inc. | ||||||||
1,298 | 6.65%, 05/13/2014 ± | 1,320 | ||||||
Hexion Specialty Chemicals | ||||||||
1,237 | 2.75%, 05/05/2013 ± | 962 | ||||||
Huntsman International LLC | ||||||||
1,342 | 1.99%, 04/19/2014 ± | 1,217 | ||||||
500 | 2.49%, 06/30/2016 ± | 453 | ||||||
Lyondell Chemical Co. | ||||||||
660 | 5.80%, 02/03/2010 ±Ψ | 622 | ||||||
375 | 9.17%, 02/03/2010 ±☼Ψ | 386 | ||||||
Lyondell Chemical Co., Dutch RC | ||||||||
17 | 3.74%, 12/20/2013 ±Ψ | 10 | ||||||
Lyondell Chemical Co., Dutch Tranche A | ||||||||
39 | 3.74%, 12/20/2013 ±Ψ | 22 | ||||||
Lyondell Chemical Co., German B-1 | ||||||||
48 | 3.99%, 12/20/2014 ±Ψ | 27 | ||||||
Lyondell Chemical Co., German B-2 | ||||||||
48 | 3.99%, 12/20/2014 ±Ψ | 28 | ||||||
Lyondell Chemical Co., German B-3 | ||||||||
48 | 3.99%, 12/20/2014 ±Ψ | 27 | ||||||
Lyondell Chemical Co., Primary RC | ||||||||
63 | 3.74%, 12/20/2013 ±Ψ | 36 | ||||||
Lyondell Chemical Co., Term Loan A | ||||||||
121 | 3.74%, 12/20/2013 ±Ψ | 68 | ||||||
Lyondell Chemical Co., U.S. B-1 | ||||||||
210 | 7.00%, 12/20/2014 ±Ψ | 119 | ||||||
Lyondell Chemical Co., U.S. B-2 | ||||||||
210 | 7.00%, 12/20/2014 ±Ψ | 119 | ||||||
Lyondell Chemical Co., U.S. B-3 | ||||||||
210 | 7.00%, 12/20/2014 ±Ψ | 119 | ||||||
5,535 | ||||||||
Finance and Insurance — 0.0% | ||||||||
Nuveen Investments, Inc. | ||||||||
865 | 3.28%, 11/13/2014 ±☼ | 745 | ||||||
Food Manufacturing — 0.2% | ||||||||
Dole Food Co., Inc. | ||||||||
52 | 0.28%, 04/12/2013 ± | 52 | ||||||
Dole Food Co., Inc. Tranche B Term Loan | ||||||||
90 | 7.97%, 04/12/2013 ± | 91 | ||||||
Dole Food Co., Inc. Tranche C Term Loan | ||||||||
324 | 8.00%, 04/12/2013 ± | 327 | ||||||
Roundy’s Supermarkets, Inc. | ||||||||
934 | 3.02%, 11/03/2011 ± | 920 | ||||||
WM Wrigley Jr. Co. | ||||||||
2,649 | 6.50%, 10/06/2014 ± | 2,679 | ||||||
4,069 | ||||||||
Food Services — 0.0% | ||||||||
Aramark Corp. | ||||||||
64 | 2.14%, 01/26/2014 ± | 58 | ||||||
991 | 2.16%, 01/26/2014 ± | 908 | ||||||
966 | ||||||||
Health Care and Social Assistance — 0.4% | ||||||||
Community Health Systems, Inc. | ||||||||
118 | 2.49%, 07/25/2014 ± | 110 | ||||||
2,320 | 2.61%, 07/25/2014 ± | 2,151 | ||||||
Golden Gate National | ||||||||
398 | 2.99%, 03/14/2011 ± | 384 | ||||||
HCA, Inc. | ||||||||
807 | 2.53%, 11/17/2013 ± | 751 | ||||||
IASIS Healthcare Capital Corp. | ||||||||
66 | 0.14%, 03/17/2014 ± | 62 | ||||||
IASIS Healthcare Capital Corp., Delayed | ||||||||
Draw Term Loan | ||||||||
246 | 2.25%, 03/17/2014 ± | 230 | ||||||
IASIS Healthcare Capital Corp., Term Loan B | ||||||||
710 | 2.24%, 03/17/2014 ± | 665 | ||||||
Life Technologies Corp. | ||||||||
1,302 | 5.25%, 11/23/2015 ± | 1,307 | ||||||
Skilled Healthcare Group, Inc. | ||||||||
1,678 | 2.28%, 06/15/2012 ± | 1,575 | ||||||
7,235 | ||||||||
Information — 0.7% | ||||||||
Charter Communications Operating LLC | ||||||||
Incremental Term Loan | ||||||||
860 | 9.25%, 03/06/2014 ±☼Ψ | 867 | ||||||
Charter Communications Operating LLC | ||||||||
Term Loan | ||||||||
796 | 6.25%, 03/06/2014 ±Ψ | 724 | ||||||
Fidelity National Information Services, Inc. | ||||||||
171 | 4.47%, 01/18/2012 ± | 171 | ||||||
First Data Corp. | ||||||||
1,935 | 3.00%, 09/24/2014 ± | 1,663 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2A | ||||||||
925 | 2.75%, 01/03/2014 ± | 871 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2B | ||||||||
925 | 2.75%, 01/03/2014 ± | 870 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2C | ||||||||
925 | 2.75%, 01/03/2014 ± | 870 | ||||||
Mediacom Broadband LLC, Term Loan D1 | ||||||||
1,515 | 1.98%, 01/31/2015 ± | 1,380 | ||||||
Metavante Corp. | ||||||||
417 | 3.73%, 11/01/2014 ± | 416 | ||||||
MetroPCS Wireless, Inc. | ||||||||
1,322 | 2.66%, 11/04/2013 ± | 1,236 | ||||||
Time Warner Telecom Holdings, Inc. | ||||||||
1,303 | 2.01%, 01/07/2013 ± | 1,243 | ||||||
UPC Financing Partnership | ||||||||
517 | 2.00%, 12/31/2014 ± | 483 | ||||||
439 | 3.75%, 12/31/2016 ± | 420 |
11
October 31, 2009
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT | ||||||||
GRADE♦ — 2.9% — (continued) | ||||||||
Information — 0.7% — (continued) | ||||||||
West Corp. | ||||||||
$ | 379 | 2.62%, 10/24/2013 ± | $ | 345 | ||||
550 | 4.12%, 07/15/2016 ± | 514 | ||||||
WideOpenWest Finance LLC | ||||||||
2,951 | 7.30%, 06/29/2015 ± | 2,257 | ||||||
14,330 | ||||||||
Miscellaneous Manufacturing — 0.1% | ||||||||
Graham Packaging Co., Inc. | ||||||||
1,531 | 6.75%, 04/15/2014 ± | 1,529 | ||||||
Motor Vehicle & Parts Manufacturing — 0.1% | ||||||||
AM General LLC | ||||||||
794 | 3.27%, 09/30/2013 ± | 729 | ||||||
American General Finance Corp. | ||||||||
37 | 0.24%, 09/30/2012 ± | 33 | ||||||
Lear Corp. | ||||||||
61 | 5.50%, 10/21/2014 ◊☼Ψ | 61 | ||||||
625 | 5.501%, 04/25/2012◊Ω | 601 | ||||||
126 | 12.25%, 08/10/2010 ±Ω | 126 | ||||||
TRW Automotive, Inc. | ||||||||
1,000 | 6.25%, 02/09/2014 ±☼ | 997 | ||||||
2,547 | ||||||||
Paper Manufacturing — 0.2% | ||||||||
Georgia-Pacific Corp. | ||||||||
2,259 | 2.32%, 12/20/2012 ± | 2,170 | ||||||
Georgia-Pacific LLC | ||||||||
1,244 | 3.59%, 12/20/2014 ± | 1,232 | ||||||
3,402 | ||||||||
Plastics and Rubber Products Manufacturing — 0.0% | ||||||||
Graham Packaging Co., Inc. | ||||||||
153 | 2.55%, 12/31/2011 ± | 149 | ||||||
Retail Trade — 0.1% | ||||||||
Michaels Stores, Inc. | ||||||||
1,320 | 2.52%, 10/31/2013 ±☼ | 1,178 | ||||||
Soap, Cleaning Compound and Toilet Manufacturing — 0.1% | ||||||||
Jarden Corp. | ||||||||
1,150 | 3.53%, 01/24/2015 ± | 1,141 | ||||||
Utilities — 0.3% | ||||||||
Calpine Corp. | ||||||||
2,554 | 3.17%, 03/29/2014 ± | 2,346 | ||||||
NRG Energy, Inc. | ||||||||
623 | 0.18%, 02/01/2013 ± | 584 | ||||||
1,159 | 2.02%, 02/01/2013 ± | 1,086 | ||||||
Texas Competitive Electric Holdings Co. LLC Term Loan B2 | ||||||||
1,799 | 3.74%, 10/10/2014 ± | 1,390 | ||||||
Texas Competitive Electric Holdings Co. LLC Term Loan B3 | ||||||||
784 | 3.74%, 10/12/2014 ± | 601 | ||||||
6,007 | ||||||||
Total senior floating rate interests: non-investment grade (cost $58,207) | $ | 56,974 | ||||||
U.S. GOVERNMENT AGENCIES — 27.1% | ||||||||
Federal Home Loan Mortgage Corporation — 8.3% | ||||||||
19,590 | 4.50%, 11/15/2039 ☼ | 19,798 | ||||||
13,265 | 5.00%, 06/01/2038 | 13,768 | ||||||
1,702 | 5.04%, 06/01/2035Δ | 1,781 | ||||||
5,830 | 5.37%, 08/01/2037Δ | 6,127 | ||||||
6,448 | 5.45%, 01/01/2037Δ | 6,778 | ||||||
1,739 | 5.46%, 07/01/2036Δ | 1,830 | ||||||
514 | 5.48%, 05/01/2036Δ | 541 | ||||||
45,091 | 5.50%, 02/01/2037 — 11/15/2038 ☼ | 47,483 | ||||||
54,278 | 6.00%, 01/01/2023 — 06/01/2038 | 57,868 | ||||||
4,454 | 6.50%, 10/01/2037□ | 4,781 | ||||||
160,755 | ||||||||
Federal National Mortgage Association — 13.4% | ||||||||
17,820 | 4.50%, 08/01/2024 | 18,541 | ||||||
2,168 | 4.67%, 06/01/2034 — 09/01/2035Δ | 2,262 | ||||||
926 | 4.74%, 04/01/2035Δ | 966 | ||||||
317 | 4.82%, 05/01/2035Δ | 330 | ||||||
398 | 4.84%, 07/01/2035Δ | 416 | ||||||
633 | 4.86%, 04/01/2035Δ | 663 | ||||||
1,152 | 4.98%, 07/01/2035Δ | 1,208 | ||||||
86,766 | 5.00%, 04/01/2018 — 11/15/2038 ☼ | 90,474 | ||||||
1,013 | 5.08%, 11/01/2035Δ | 1,058 | ||||||
3,955 | 5.24%, 02/01/2038Δ | 4,163 | ||||||
21,899 | 5.26%, 01/01/2038 — 04/01/2038Δ | 23,043 | ||||||
49,690 | 5.50%, 01/01/2017 — 11/15/2038 ☼ | 52,556 | ||||||
28,836 | 6.00%, 03/01/2013 — 11/01/2038 ☼ | 30,681 | ||||||
38,875 | 6.50%, 11/01/2037 — 05/01/2038 | 41,790 | ||||||
1,543 | 7.00%, 10/01/2037 | 1,686 | ||||||
199 | 7.50%, 12/01/2029 — 09/01/2031 | 226 | ||||||
270,063 | ||||||||
Government National Mortgage Association — 5.4% | ||||||||
58,146 | 4.50%, 08/20/2039 | 58,935 | ||||||
34,521 | 5.00%, 06/15/2039 — 11/15/2039 ☼ | 35,923 | ||||||
8,356 | 5.50%, 05/15/2033 — 04/15/2038 | 8,851 | ||||||
2,065 | 6.50%, 09/15/2028 — 07/15/2032 | 2,228 | ||||||
105,937 | ||||||||
Total U.S. government agencies (cost $520,899) | $ | 536,755 | ||||||
U.S. GOVERNMENT SECURITIES — 19.6% | ||||||||
U.S. Treasury Securities — 19.6% | ||||||||
U.S. Treasury Notes — 19.6% | ||||||||
$ | 174,564 | 1.00%, 09/30/2011 | $ | 175,055 | ||||
120,130 | 1.50%, 10/31/2010 | 121,425 | ||||||
66,475 | 2.25%, 05/31/2014 | 66,761 | ||||||
9,072 | 2.38%, 09/30/2014 | 9,108 | ||||||
8,496 | 3.63%, 08/15/2019 | 8,659 | ||||||
5,957 | 4.50%, 08/15/2039 | 6,223 | ||||||
387,231 | ||||||||
Total U.S. government securities (cost $386,650) | $ | 387,231 | ||||||
12
Contracts | Market Value ╪ | |||||||||||
CALL OPTIONS PURCHASED — 0.1% | ||||||||||||
Long Call Future Option Contract — 0.1% | ||||||||||||
U.S. 10 Year Note Option | ||||||||||||
2 | Expiration: February, 2010, Exercise Price: $118.00 | $ | 2,558 | |||||||||
Total call options purchased (cost $2,420) | $ | 2,558 | ||||||||||
PUT OPTIONS PURCHASED — 0.0% | ||||||||||||
Long Put Future Option Contract — 0.0% | ||||||||||||
U.S. 10 Year Note Option | ||||||||||||
1 | Expiration: February, 2010, Exercise Price: $110.00 | $ | 267 | |||||||||
Total put options purchased (cost $321) | $ | 267 | ||||||||||
Shares or Principal Amount | Market Value ╪ | |||||||||||
PREFERRED STOCKS — 0.0% | ||||||||||||
Banks — 0.0% | ||||||||||||
85 | Federal Home Loan Mortgage Corp., | |||||||||||
8.38% | $ | 94 | ||||||||||
Total preferred stocks (cost $2,139) | $ | 94 | ||||||||||
Total long-term investments (cost $1,871,272) | $ | 1,932,042 | ||||||||||
SHORT-TERM INVESTMENTS — 7.7% | ||||||||||||
Investment Pools and Funds — 6.8% | ||||||||||||
$ | 91,818 | JP Morgan U.S. Government Money Market Fund | $ | 91,818 | ||||||||
— | State Street Bank U.S. Government Money Market Fund | — | ||||||||||
42,536 | Wells Fargo Advantage Government Money Market Fund | 42,536 | ||||||||||
134,354 | ||||||||||||
Repurchase Agreements — 0.9% | ||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 11/02/2009 in the amount of $9,739, collateralized by U.S. Treasury Bond 5.25% — 7.88%, 2021 — 2029, value of $10,086) | ||||||||||||
$ | 9,738 | 0.06%, 10/30/2009 | 9,738 | |||||||||
RBS Greenwich Capital Markets TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $4,899, collateralized by U.S. Treasury Bond 5.00%, 2037, U.S. Treasury Note 3.13% — 4.63%, 2013 — 2017, value of $4,997) | ||||||||||||
4,899 | 0.06%, 10/30/2009 | 4,899 | ||||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 11/02/2009 in the amount of $4,487, collateralized by U.S. Treasury Note 1.50%, 2010, value of $4,548) | ||||||||||||
4,487 | 0.04%, 10/30/2009 | 4,487 | ||||||||||
19,124 | ||||||||||||
Total short-term investments (cost $153,478) | $ | 153,478 | ||||||||||
Total investments (cost $2,024,750)▲ | 105.3 | % | $ | 2,085,520 | ||||||||
Other assets and liabilities | (5.3 | )% | (104,364 | ) | ||||||||
Total net assets | 100.0 | % | $ | 1,981,156 | ||||||||
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 12.8% of total net assets at October 31, 2009. | |
▲ | At October 31, 2009, the cost of securities for federal income tax purposes was $2,026,685 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 83,966 | ||
Unrealized Depreciation | (25,131 | ) | ||
Net Unrealized Appreciation | $ | 58,835 | ||
† | 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 October 31, 2009, was $1,727, which represents 0.09% 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. | |
D | Variable rate securities; the rate reported is the coupon rate in effect at October 31, 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 October 31, 2009, was $212,933, which represents 10.75% 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 determined to be liquid. At October 31, 2009, the market value of these securities amounted to $14,469 or 0.73% of total net assets. | |
ª | Perpetual maturity security. Maturity date shown is the first call date. | |
► | The interest rates disclosed for interest only strips represent effective yields based upon estimated future cash flows at October 31, 2009. | |
☼ | The cost of securities purchased on a when-issued or delayed delivery basis at October 31, 2009 was $126,578. |
13
October 31, 2009
(000’s Omitted)
± | The interest rate disclosed for these securities represents the average coupon as of October 31, 2009. | |
◊ | The interest rate disclosed for these securities represents an estimated average coupon as of October 31, 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 JPY — Japanese Yen | |
♦ | Senior loans 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. | |
□ | Security pledged as initial margin deposit for open futures contracts at October 31, 2009. | |
Futures Contracts Outstanding at October 31, 2009 |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
10 Year U.S. Treasury Note | 161 | Short | Dec 2009 | $ | (130 | ) | ||||||||||
U.S. 2 Year Note | 54 | Short | Dec 2009 | $ | (46 | ) | ||||||||||
U.S. 5 Year Note | 529 | Short | Dec 2009 | $ | (409 | ) | ||||||||||
U.S. Long Bond | 342 | Long | Dec 2009 | $ | 328 | |||||||||||
$ | (257 | ) | ||||||||||||||
* | 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 | |||||||||
03/2005 | $ | 13,599 | Banc of America Commercial Mortgage, Inc., 4.52%, 09/11/2036 - 144A | $ | 59 | |||||||
08/2007 | $ | 18,571 | Bayview Commercial Asset Trust, 7.50%, 09/25/2037 — 144A | 2,519 | ||||||||
10/2004 | $ | 9,017 | Bear Stearns Commercial Mortgage Securities, Inc., 4.07%, 07/11/2042 | 155 | ||||||||
12/2004 | $ | 8,397 | Bear Stearns Commercial Mortgage Securities, Inc., 4.12%, 11/11/2041 | 121 | ||||||||
04/2006 | $ | 23,571 | CBA Commercial Small Balance Commercial Mortgage, 7.00%, 07/25/2035 — 06/25/2038 — 144A | 112 | ||||||||
02/2007 | $ | — | Citigroup Mortgage Loan Trust, Inc., 0.00%, 01/25/2037 — 144A | — | ||||||||
02/2007 – 10/2009 | $ | 318 | Citigroup Mortgage Loan Trust, Inc., 12.00%, 01/25/2037 — 144A | 551 | ||||||||
08/2007 | $ | 8,507 | Countrywide Home Loans, Inc., 6.00%, 10/25/2037 | 8,353 | ||||||||
06/2006 | $ | 26,865 | GE Business Loan Trust, 6.14%, 05/15/2034 — 144A | 48 | ||||||||
07/2004 | $ | 19,922 | Goldman Sachs Mortgage Securities Corp. II, 4.38%, 08/10/2038 — 144A | 89 | ||||||||
06/2006 – 06/2007 | $ | 3,500 | Intelsat Bermuda Ltd., 9.25%, 06/15/2016 | 3,640 | ||||||||
03/2007 | $ | 385 | JP Morgan Automotive Receivable Trust, 12.85%, 03/15/2012 | 385 | ||||||||
09/2006 | $ | 19,742 | LB-UBS Commercial Mortgage Trust, 5.26%, 09/15/2039 | 454 | ||||||||
09/2006 | $ | 19,750 | Merrill Lynch/Countrywide Commercial Mortgage Trust, 5.27%, 07/12/2046 | 480 | ||||||||
04/2005 – 08/2006 | $ | 2,756 | Morgan Stanley Dean Witter Capital I, 0.00%, 08/25/2032 — Reg D | 84 | ||||||||
04/2007 | $ | 48 | Nationstar Home Equity Loan Trust, 9.97%, 03/25/2037 — 144A | 48 | ||||||||
11/2006 | $ | 850 | North Street Referenced Linked Notes, 1.33%, 04/28/2011 — 144A | 822 | ||||||||
03/2005 | $ | 437 | Popular ABS Mortgage Pass-Through Trust, 5.42%, 04/25/2035 | 437 | ||||||||
10/2001 – 11/2001 | $ | 1,900 | Potlatch Corp., 12.50%, 12/01/2009 | 1,902 | ||||||||
03/2008 | $ | 3,529 | Wells Fargo Alternative Loan Trust, 6.25%, 11/25/2037 | 2,851 |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Australian Dollar (Buy) | $ | 9,736 | $ | 9,800 | 11/03/09 | $ | (64 | ) | ||||||||
Euro (Buy) | 57,773 | 58,386 | 11/13/09 | (613 | ) | |||||||||||
Euro (Sell) | 71,840 | 71,781 | 11/13/09 | (59 | ) | |||||||||||
Euro (Sell) | 19,270 | 19,345 | 11/13/09 | 75 | ||||||||||||
Japanese Yen (Buy) | 18,872 | 18,940 | 11/09/09 | (68 | ) | |||||||||||
Japanese Yen (Sell) | 34,630 | 34,316 | 11/09/09 | (314 | ) | |||||||||||
Japanese Yen (Buy) | 16,684 | 16,365 | 11/09/09 | 319 | ||||||||||||
Japanese Yen (Sell) | 18,519 | 18,580 | 11/09/09 | 61 | ||||||||||||
$ | (663 | ) | ||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
14
October 31, 2009
(000’s Omitted)
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Affiliated Investment Companies | $ | 23,428 | $ | 23,428 | $ | — | $ | — | ||||||||
Asset & Commercial Mortgage Backed Securities | 155,925 | — | 145,970 | 9,955 | ||||||||||||
Call Options Purchased | 2,558 | 2,558 | — | — | ||||||||||||
Corporate Bonds: Investment Grade | 636,132 | — | 628,370 | 7,762 | ||||||||||||
Corporate Bonds: Non-Investment Grade | 113,421 | — | 113,421 | — | ||||||||||||
Municipal Bonds | 19,257 | — | 19,257 | — | ||||||||||||
Preferred Stocks ‡ | 94 | 94 | — | — | ||||||||||||
Put Options Purchased | 267 | 267 | — | — | ||||||||||||
Senior Floating Rate Interests: Non-Investment Grade | 56,974 | — | 56,974 | — | ||||||||||||
U.S. Government Agencies | 536,755 | — | 536,755 | — | ||||||||||||
U.S. Government Securities | 387,231 | 199,045 | 188,186 | — | ||||||||||||
Short-Term Investments | 153,478 | 134,354 | 19,124 | — | ||||||||||||
Total | $ | 2,085,520 | $ | 359,746 | $ | 1,708,057 | $ | 17,717 | ||||||||
Other Financial Instruments * | $ | 783 | $ | 328 | $ | 455 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments * | $ | 1,703 | $ | 585 | $ | 1,118 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. | |
* | 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. |
Balance as of | Change in | Transfers In | Balance as of | |||||||||||||||||||||
October 31, | Realized Gain | Unrealized | and/or Out of | October 31, | ||||||||||||||||||||
2008 | (Loss) | Appreciation | Net Purchases | Level 3 | 2009 | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Asset & Commercial Mortgage Backed Securities | 14,452 | (6,177 | ) | 2,213 | * | 36 | (569 | ) | 9,955 | |||||||||||||||
Corporate Bonds | 3,929 | (1,788 | ) | 1,415 | † | 5,263 | (1,057 | ) | 7,762 | |||||||||||||||
Total | $ | 18,381 | $ | (7,965 | ) | $ | 3,628 | $ | 5,299 | $ | (1,626 | ) | $ | 17,717 | ||||||||||
Other Financial Instruments ‡ | $ | — | $ | — | § | $ | — | $ | — | $ | — | $ | — | |||||||||||
Liabilities: | ||||||||||||||||||||||||
Other Financial Instruments ‡ | $ | — | $ | — | § | $ | — | $ | — | $ | — | $ | — |
* | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $(2,037). | |
† | Change in unrealized gains or losses in the current period relating to assets still held at October 31, 2009 was $(8). | |
‡ | 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. | |
§ | The realized gain (loss) earned for other financial instruments during the period ended October 31, 2009 was $351. |
15
October 31, 2009
(000’s Omitted)
Assets: | ||||
Investments in securities, at market value (cost $2,002,889) | $ | 2,062,092 | ||
Investments in underlying affiliated funds, at market value (cost $21,861) | 23,428 | |||
Cash | 908 | |||
Foreign currency on deposit with custodian (cost $1,710) | 1,755 | |||
Unrealized appreciation on forward foreign currency contracts | 455 | |||
Receivables: | ||||
Investment securities sold | 13,434 | |||
Fund shares sold | 2,851 | |||
Dividends and interest | 16,740 | |||
Variation margin | 507 | |||
Other assets | 347 | |||
Total assets | 2,122,517 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 1,118 | |||
Payables: | ||||
Investment securities purchased | 136,205 | |||
Fund shares redeemed | 2,464 | |||
Investment management fees | 168 | |||
Dividends | 143 | |||
Distribution fees | 68 | |||
Variation margin | 611 | |||
Accrued expenses | 298 | |||
Other liabilities | 286 | |||
Total liabilities | 141,361 | |||
Net assets | $ | 1,981,156 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 2,022,757 | |||
Accumulated undistributed net investment income | 2,819 | |||
Accumulated net realized loss on investments and foreign currency transactions | (104,299 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 59,879 | |||
Net assets | $ | 1,981,156 | ||
Shares authorized | 850,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 10.21/$10.69 | ||
Shares outstanding | 79,921 | |||
Net assets | $ | 816,191 | ||
Class B: Net asset value per share | $ | 10.15 | ||
Shares outstanding | 8,252 | |||
Net assets | $ | 83,760 | ||
Class C: Net asset value per share | $ | 10.23 | ||
Shares outstanding | 11,691 | |||
Net assets | $ | 119,568 | ||
Class I: Net asset value per share | $ | 10.22 | ||
Shares outstanding | 1,045 | |||
Net assets | $ | 10,680 | ||
Class R3: Net asset value per share | $ | 10.36 | ||
Shares outstanding | 177 | |||
Net assets | $ | 1,836 | ||
Class R4: Net asset value per share | $ | 10.35 | ||
Shares outstanding | 2,118 | |||
Net assets | $ | 21,920 | ||
Class R5: Net asset value per share | $ | 10.35 | ||
Shares outstanding | 39 | |||
Net assets | $ | 408 | ||
Class Y: Net asset value per share | $ | 10.34 | ||
Shares outstanding | 89,614 | |||
Net assets | $ | 926,793 | ||
16
For the Year Ended October 31, 2009
(000’s Omitted)
Investment Income: | ||||
Dividends from underlying affiliated funds | $ | 184 | ||
Interest | 83,523 | |||
Securities lending | 172 | |||
Total investment income | 83,879 | |||
Expenses: | ||||
Investment management fees | 8,491 | |||
Administrative services fees | 27 | |||
Transfer agent fees | 1,866 | |||
Distribution fees | ||||
Class A | 1,780 | |||
Class B | 760 | |||
Class C | 960 | |||
Class R3 | 3 | |||
Class R4 | 42 | |||
Custodian fees | 28 | |||
Accounting services fees | 292 | |||
Registration and filing fees | 155 | |||
Board of Directors’ fees | 43 | |||
Audit fees | 60 | |||
Other expenses | 377 | |||
Total expenses (before waivers and fees paid indirectly) | 14,884 | |||
Expense waivers | (355 | ) | ||
Transfer agent fee waivers | (56 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (411 | ) | ||
Total expenses, net | 14,473 | |||
Net Investment Income | 69,406 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (54,735 | ) | ||
Net realized gain on futures | 1,399 | |||
Net realized gain on written options | 56 | |||
Net realized loss on swap contracts | (3,729 | ) | ||
Net realized gain on forward foreign currency contracts | 1,968 | |||
Net realized gain on other foreign currency transactions | 216 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (54,825 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 237,166 | |||
Net unrealized depreciation of futures | (1,769 | ) | ||
Net unrealized depreciation of forward foreign currency contracts | (7,049 | ) | ||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 9,056 | |||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions | 237,404 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 182,579 | |||
Net Increase in Net Assets Resulting from Operations | $ | 251,985 | ||
17
(000’s Omitted)
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 69,406 | $ | 67,225 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (54,825 | ) | (26,681 | ) | ||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 237,404 | (172,204 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 251,985 | (131,660 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (33,511 | ) | (33,441 | ) | ||||
Class B | (3,137 | ) | (3,587 | ) | ||||
Class C | (3,782 | ) | (4,187 | ) | ||||
Class I | (362 | ) | (288 | ) | ||||
Class R3 | (18 | ) | (3 | ) | ||||
Class R4 | (755 | ) | (445 | ) | ||||
Class R5 | (14 | ) | (13 | ) | ||||
Class Y | (35,288 | ) | (28,086 | ) | ||||
Total distributions | (76,867 | ) | (70,050 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 90,469 | * | 140,751 | |||||
Class B | 2,261 | † | 1,928 | |||||
Class C | 22,158 | ‡ | 15,602 | |||||
Class I | 3,740 | § | 3,949 | |||||
Class R3 | 1,647 | ** | 133 | |||||
Class R4 | 7,377 | †† | 11,396 | |||||
Class R5 | 113 | ‡‡ | 169 | |||||
Class Y | 288,508 | 283,425 | ||||||
Net increase from capital share transactions | 416,273 | 457,353 | ||||||
Net Increase In Net Assets | 591,391 | 255,643 | ||||||
Net Assets: | ||||||||
Beginning of period | 1,389,765 | 1,134,122 | ||||||
End of period | $ | 1,981,156 | $ | 1,389,765 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 2,819 | $ | 7,508 | ||||
* | Includes merger activity in the amount of $39,780. | |
† | Includes merger activity in the amount of $7,055. | |
‡ | Includes merger activity in the amount of $16,957. | |
§ | Includes merger activity in the amount of $703. | |
** | Includes merger activity in the amount of $166. | |
†† | Includes merger activity in the amount of $422. | |
‡‡ | Includes merger activity in the amount of $226. |
18
October 31, 2009
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six portfolios. Financial statements for The Hartford Total Return 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 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 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 |
19
October 31, 2009
(000’s Omitted)
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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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. 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 Valuation Time. 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 using bid prices or using valuations based on a matrix system (which considers factors such as security prices, yield, maturity and ratings) as provided by independent pricing services. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service may be 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 generally valued at amortized cost, which approximates market value. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s Valuation Time. | |||
Options contracts on securities, currencies, indices, futures contracts, commodities and other instruments shall be valued at their last reported sale 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 sale price at the Valuation Time on another exchange or market where it did trade. If it is not possible to determine the last reported sale price on the Primary Market or another 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. Absent both bid and asked prices on such exchange, the bid price may be used. | |||
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. | |||
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 and asked prices as of the Valuation Time. | |||
Forward foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Forward foreign currency contracts are valued using foreign currency exchange rates and forward rates on the Valuation Date from an independent pricing service. |
20
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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable 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. | |||
For purposes of the roll forward reconciliation for all Level 3 securities from the beginning of the reporting period to the end of the reporting period, transfers in and transfers out are shown at the beginning of the period fair value. | |||
Refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
c) | Foreign Currency Transactions – Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities held. Exchange rate fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. |
21
October 31, 2009
(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) | 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
f) | 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 October 31, 2009. | |||
g) | Forward Foreign Currency Contracts – The Fund may enter into forward foreign currency contracts that obligate the Fund to purchase 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. The Fund had outstanding forward foreign currency contracts as shown on the Schedule of Investments as of October 31, 2009. | |||
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 may use 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 October 31, 2009. |
22
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 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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 an 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 on the Schedule of Investments, had illiquid and/or restricted securities as of October 31, 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. The Fund, as shown on the Schedule of Investments, had when-issued or delayed delivery securities as of October 31, 2009. | ||
l) | 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. | ||
m) | 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 |
23
October 31, 2009
(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. | |||
n) | 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. | |||
o) | Credit Default Swaps – The Fund is subject to credit risk in the normal course of pursuing its investment objectives. The Fund may enter into event linked swaps, including credit default swap contracts. The credit default swap market allows the Fund to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults of corporate and sovereign issuers, or to create exposure to corporate or sovereign issuers to which it is not otherwise exposed. Certain credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying security in the event of a credit event, such as payment default or bankruptcy. | ||
Under a credit default swap, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying security at par if the defined credit event occurs. Upon the occurrence of a defined credit event, the difference between the value of the reference obligation and the swap’s notional amount is recorded as realized gain or loss on swap transactions in the Statement of Operations. 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. This risk is mitigated by having a master netting arrangement between the Fund and the counterparty (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities) or by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty. The Fund will generally not buy protection on issuers that are not currently held by the Fund. The Fund had no outstanding credit default swaps as of October 31, 2009. | |||
p) | Interest Rate Swaps – The Fund is subject to interest rate risk exposure in the normal course of pursuing its investment objectives. Because the Fund holds fixed rate bonds, the value of these bonds may decrease if interest rates rise. To help hedge against this risk and to maintain its ability to generate income at prevailing market rates, the Fund may enter into interest rate swap contracts. In a typical interest rate swap, one party agrees to make regular payments equal to a floating interest rate, based on a specified interest rate benchmark (i.e. LIBOR, etc.), 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. The net interest received or paid on interest rate swap agreements is accrued daily as interest income/expense. Interest rate swaps are marked-to-market daily and the change, if any, is recorded as an unrealized gain or loss in the Statement of Operations. When the interest rate swap contract is terminated early, the Fund records a realized gain or loss equal to the difference between the current realized value and the expected cash flows. |
24
If an interest rate swap agreement provides for payments in different currencies, the parties might agree to exchange the notional principal amount as well. Interest rate swaps may also depend on other prices or rates, such as the value of an index or mortgage prepayment rates. The risks of interest rate swaps include changes in market conditions which will affect the value of the contract or the cash flows and the possible inability of the counterparty to fulfill its obligations under the agreement. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the contract’s remaining life, to the extent that amount is positive. This risk may be mitigated by having a master netting arrangement between the Fund and the counterparty or by posting collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty. As of October 31, 2009, the Fund had no outstanding interest rate swaps. | |||
q) | 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. | ||
r) | Additional Derivative Instrument(s) Information | ||
Derivative Instrument(s) as of October 31, 2009. |
Asset Derivatives | Liability Derivatives | |||||||||||
Risk Exposure Category | Statement of Assets and Liabilities Location | Statement of Assets and Liabilities Location | ||||||||||
Interest rate contracts | Summary of Net Assets — Unrealized appreciation | $ | 328 | Summary of Net Assets — Unrealized depreciation | $ | 585 | ||||||
Foreign exchange contracts | Unrealized appreciation on forward foreign currency contracts | 455 | Unrealized depreciation on forward foreign currency contracts | 1,118 |
The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the year ended October 31, 2009. | |||
Realized Gain/Loss and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments for the year ended October 31, 2009: |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | $ | 56 | $ | 146 | $ | 1,399 | $ | — | $ | — | $ | 1,601 | ||||||||||||
Foreign exchange contracts | — | — | — | 1,968 | — | 1,968 | ||||||||||||||||||
Credit contracts | — | — | — | — | (3,729 | ) | (3,729 | ) | ||||||||||||||||
Total | $ | 56 | $ | 146 | $ | 1,399 | $ | 1,968 | $ | (3,729 | ) | $ | (160 | ) | ||||||||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||||||
Forward | ||||||||||||||||||||||||
Purchased | Currency | |||||||||||||||||||||||
Risk Exposure Category | Written Options | Options | Futures | Contracts | Swaps | Total | ||||||||||||||||||
Interest rate contracts | — | 84 | (1,769 | ) | — | — | $ | (1,684 | ) | |||||||||||||||
Foreign exchange contracts | — | — | — | (7,049 | ) | — | (7,049 | ) | ||||||||||||||||
Total | $ | — | $ | 84 | $ | (1,769 | ) | $ | (7,049 | ) | $ | — | $ | (8,733 | ) | |||||||||
s) | 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. |
25
October 31, 2009
(000’s Omitted)
3. | Futures and Options: | |
Futures and Options Transactions – The Fund is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Fund may invest in futures and options contracts in order to gain exposure to or hedge against changes in the value of equities, interest rates or foreign currencies. 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 asset 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. With futures, there is minimal counterparty risk to the Fund since futures are exchange traded through a clearing house. The clearing house requires sufficient collateral to cover margins. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of October 31, 2009. | ||
An option contract is a contract sold by one party to another party that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a specific period of time or on a specific date. 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 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. The maximum amount of loss with respect to the Fund’s written put option is the cost of buying the underlying security or currency from the counterparty. The maximum loss may be offset by proceeds received from selling the underlying securities. The Fund, as shown on the Schedule of Investments, had outstanding purchased option contracts as of October 31, 2009. Transactions involving written option contracts during the year ended October 31, 2009, are summarized below: |
Options Contract Activity During the Year Ended October 31, 2009 | ||||||||
Call Options Written During the Period | Number of Contracts* | Premium Amounts | ||||||
Beginning of the period | — | $ | — | |||||
Written | 1,870 | 1,046 | ||||||
Expired | — | — | ||||||
Closed | (1,870 | ) | (1,046 | ) | ||||
Exercised | — | — | ||||||
End of Period | — | $ | — | |||||
26
4. | Federal Income Taxes: |
a) | Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) – Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings – 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 76,879 | $ | 70,069 |
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 2,301 | ||
Accumulated Capital Losses * | (102,620 | ) | ||
Unrealized Appreciation † | 58,863 | |||
Total Accumulated Deficit | $ | (41,456 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts — The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to increase accumulated undistributed net investment income by $2,772 and decrease accumulated net realized loss on investments by $2,772. |
27
October 31, 2009
(000’s Omitted)
e) | Capital Loss Carryforward – At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2013 | $ | 38 | ||
2014 | 8,604 | |||
2015 | 637 | |||
2016 | 34,382 | |||
2017 | 58,959 | |||
Total | $ | 102,620 | ||
Based on certain provisions in the Internal Revenue Code, various limitations regarding the future utilization of capital losses may apply. | |||
f) | Accounting for Uncertainty in Income Taxes – Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
5. | Expenses: |
a) | Investment Management Agreement – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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 year ended October 31, 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 | 0.525 | % | ||
On next $4 billion | 0.500 | % | ||
On next $5 billion | 0.480 | % | ||
Over $10 billion | 0.470 | % |
Effective October 2, 2009 and expiring on October 2, 2010, HIFSCO voluntarily agreed to waive management fees equal to the expenses related to the affiliated investment companies the Fund acquired. | |||
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 services 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 |
28
certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the year ended October 31, 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 year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.00 | % | 1.00 | % | 1.00 | % | 1.19 | % | 1.20 | % | ||||||||||
Class B Shares | 1.68 | 1.70 | 1.75 | 1.95 | 1.95 | |||||||||||||||
Class C Shares | 1.75 | 1.74 | 1.75 | 1.86 | 1.87 | |||||||||||||||
Class I Shares | 0.75 | 0.68 | 0.72 | 0.91 | * | |||||||||||||||
Class R3 Shares | 1.25 | 1.25 | 1.25 | † | ||||||||||||||||
Class R4 Shares | 0.98 | 0.99 | 1.00 | † | ||||||||||||||||
Class R5 Shares | 0.69 | 0.69 | 0.79 | † | ||||||||||||||||
Class Y Shares | 0.58 | 0.59 | 0.61 | 0.70 | 0.73 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006. | |
† | 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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $4,386 and contingent deferred sales charges of $198 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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. |
29
October 31, 2009
(000’s Omitted)
For the year ended October 31, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $63. 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was in the amount of $4. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $1,779 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. These fees are accrued daily and paid monthly. |
6. | Affiliate Holdings: | |
As of October 31, 2009, The Hartford Checks and Balances Fund, an affiliated fund, had ownership of 50,639 Class Y shares of the Fund. | ||
7. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 2,251,527 | ||
Sales Proceeds Excluding U.S. Government Obligations | 2,017,757 | |||
Cost of Purchases for U.S. Government Obligations | 1,819,656 | |||
Sales Proceeds for U.S. Government Obligations | 1,614,357 |
30
8. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 24,389 | 3,356 | (22,376 | ) | 3,907 | 9,276 | 28,339 | 3,168 | (18,011 | ) | — | 13,496 | ||||||||||||||||||||||||||||
Amount | $ | 233,619 | $ | 32,100 | $ | (215,030 | ) | $ | 39,780 | $ | 90,469 | $ | 291,445 | $ | 32,295 | $ | (182,989 | ) | $ | — | $ | 140,751 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,003 | 307 | (2,793 | ) | 697 | 214 | 2,186 | 328 | (2,347 | ) | — | 167 | ||||||||||||||||||||||||||||
Amount | $ | 18,949 | $ | 2,910 | $ | (26,653 | ) | $ | 7,055 | $ | 2,261 | $ | 22,334 | $ | 3,336 | $ | (23,742 | ) | $ | — | $ | 1,928 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,670 | 326 | (3,439 | ) | 1,665 | 2,222 | 4,963 | 333 | (3,873 | ) | — | 1,423 | ||||||||||||||||||||||||||||
Amount | $ | 35,129 | $ | 3,117 | $ | (33,045 | ) | $ | 16,957 | $ | 22,158 | $ | 51,652 | $ | 3,403 | $ | (39,453 | ) | $ | — | $ | 15,602 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 783 | 29 | (502 | ) | 69 | 379 | 955 | 23 | (602 | ) | — | 376 | ||||||||||||||||||||||||||||
Amount | $ | 7,571 | $ | 277 | $ | (4,811 | ) | $ | 703 | $ | 3,740 | $ | 9,815 | $ | 232 | $ | (6,098 | ) | $ | — | $ | 3,949 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 170 | 2 | (25 | ) | 16 | 163 | 14 | — | (1 | ) | — | 13 | ||||||||||||||||||||||||||||
Amount | $ | 1,708 | $ | 18 | $ | (245 | ) | $ | 166 | $ | 1,647 | $ | 144 | $ | 2 | $ | (13 | ) | $ | — | $ | 133 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 993 | 77 | (355 | ) | 41 | 756 | 1,141 | 44 | (98 | ) | — | 1,087 | ||||||||||||||||||||||||||||
Amount | $ | 9,676 | $ | 749 | $ | (3,470 | ) | $ | 422 | $ | 7,377 | $ | 11,951 | $ | 450 | $ | (1,005 | ) | $ | — | $ | 11,396 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 13 | 1 | (26 | ) | 22 | 10 | 25 | 1 | (10 | ) | — | 16 | ||||||||||||||||||||||||||||
Amount | $ | 128 | $ | 14 | $ | (255 | ) | $ | 226 | $ | 113 | $ | 261 | $ | 13 | $ | (105 | ) | $ | — | $ | 169 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 34,546 | 3,608 | (8,621 | ) | — | 29,533 | 36,445 | 2,763 | (12,911 | ) | — | 26,297 | ||||||||||||||||||||||||||||
Amount | $ | 336,617 | $ | 35,074 | $ | (83,183 | ) | $ | — | $ | 288,508 | $ | 380,100 | $ | 28,346 | $ | (125,021 | ) | $ | — | $ | 283,425 |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 537 | $ | 5,200 | |||||
For the Year Ended October 31, 2008 | 283 | $ | 2,922 |
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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. |
31
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
11. | Fund Merger: | |
Reorganization of The Hartford Income Allocation Fund into the Fund: At a Special Meeting of Shareholders held on September 9, 2009, the shareholders of The Hartford Income Allocation Fund approved a proposed Plan of Reorganization providing for the acquisition of all the assets and liabilities of The Hartford Income Allocation Fund (“Target Fund”) by the Fund (“Acquiring Fund”). | ||
Under the terms of the Plan of Reorganization, and pursuant to the approval by shareholders of The Hartford Income Allocation Fund, the assets were acquired by the Fund on October 2, 2009. The Fund acquired the assets of The Hartford Income Allocation Fund in exchange for shares in the Fund, which were distributed pro rata by The Hartford Income Allocation Fund to shareholders on October 2, 2009 (“Merger Date”), in complete liquidation of The Hartford Income Allocation Fund. | ||
This merger was accomplished by a tax free exchange as detailed below: |
Net assets of | ||||||||||||||||||||
Acquiring Fund | Net assets of | Acquiring | ||||||||||||||||||
Net assets of Target | shares issued to the | Acquiring Fund | Fund | |||||||||||||||||
Fund on Merger | Target Fund shares | Target Fund’s | immediately before | immediately | ||||||||||||||||
Date | exchanged | shareholders | merger | after merger | ||||||||||||||||
Class A | $ | 39,780 | 4,213 | 3,907 | $ | 771,880 | $ | 811,660 | ||||||||||||
Class B | 7,055 | 747 | 697 | 77,956 | 85,011 | |||||||||||||||
Class C | 16,957 | 1,797 | 1,665 | 102,528 | 119,485 | |||||||||||||||
Class I | 703 | 74 | 69 | 9,987 | 10,690 | |||||||||||||||
Class R3 | 166 | 18 | 16 | 1,664 | 1,830 | |||||||||||||||
Class R4 | 422 | 45 | 41 | 20,453 | 20,875 | |||||||||||||||
Class R5 | 226 | 24 | 22 | 153 | 379 | |||||||||||||||
Class Y | N/A | N/A | N/A | 899,016 | 899,016 | |||||||||||||||
Total | $ | 65,309 | 6,918 | 6,417 | $ | 1,883,637 | $ | 1,948,946 |
Unrealized Appreciation | Accumulated Net | |||||||||||
Fund | (Depreciation) | Realized Gains (Losses) | Capital Stock | |||||||||
Target Fund | $ | 1,204 | $ | (3,940 | ) | $ | 68,045 |
12. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
32
33
Financial Highlights
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 9.20 | $ | 0.40 | $ | — | $ | 1.07 | $ | 1.47 | $ | (0.46 | ) | $ | — | $ | — | $ | (0.46 | ) | $ | 1.01 | $ | 10.21 | ||||||||||||||||||||
B | 9.15 | 0.33 | — | 1.06 | 1.39 | (0.39 | ) | — | — | (0.39 | ) | 1.00 | 10.15 | |||||||||||||||||||||||||||||||
C | 9.22 | 0.33 | — | 1.06 | 1.39 | (0.38 | ) | — | — | (0.38 | ) | 1.01 | 10.23 | |||||||||||||||||||||||||||||||
I | 9.21 | 0.43 | — | 1.06 | 1.49 | (0.48 | ) | — | — | (0.48 | ) | 1.01 | 10.22 | |||||||||||||||||||||||||||||||
R3 | 9.32 | 0.42 | — | 1.05 | 1.47 | (0.43 | ) | — | — | (0.43 | ) | 1.04 | 10.36 | |||||||||||||||||||||||||||||||
R4 | 9.32 | 0.42 | — | 1.07 | 1.49 | (0.46 | ) | — | — | (0.46 | ) | 1.03 | 10.35 | |||||||||||||||||||||||||||||||
R5 | 9.32 | 0.42 | — | 1.09 | 1.51 | (0.48 | ) | — | — | (0.48 | ) | 1.03 | 10.35 | |||||||||||||||||||||||||||||||
Y | 9.31 | 0.45 | — | 1.07 | 1.52 | (0.49 | ) | — | — | (0.49 | ) | 1.03 | 10.34 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.52 | 0.49 | — | (1.29 | ) | (0.80 | ) | (0.52 | ) | — | — | (0.52 | ) | (1.32 | ) | 9.20 | ||||||||||||||||||||||||||||
B | 10.47 | 0.42 | — | (1.29 | ) | (0.87 | ) | (0.45 | ) | — | — | (0.45 | ) | (1.32 | ) | 9.15 | ||||||||||||||||||||||||||||
C | 10.54 | 0.42 | — | (1.30 | ) | (0.88 | ) | (0.44 | ) | — | — | (0.44 | ) | (1.32 | ) | 9.22 | ||||||||||||||||||||||||||||
I | 10.52 | 0.52 | — | (1.28 | ) | (0.76 | ) | (0.55 | ) | — | — | (0.55 | ) | (1.31 | ) | 9.21 | ||||||||||||||||||||||||||||
R3 | 10.64 | 0.47 | — | (1.30 | ) | (0.83 | ) | (0.49 | ) | — | — | (0.49 | ) | (1.32 | ) | 9.32 | ||||||||||||||||||||||||||||
R4 | 10.65 | 0.51 | — | (1.32 | ) | (0.81 | ) | (0.52 | ) | — | — | (0.52 | ) | (1.33 | ) | 9.32 | ||||||||||||||||||||||||||||
R5 | 10.64 | 0.54 | — | (1.31 | ) | (0.77 | ) | (0.55 | ) | — | — | (0.55 | ) | (1.32 | ) | 9.32 | ||||||||||||||||||||||||||||
Y | 10.64 | 0.54 | — | (1.31 | ) | (0.77 | ) | (0.56 | ) | — | — | (0.56 | ) | (1.33 | ) | 9.31 | ||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.59 | 0.49 | — | (0.06 | ) | 0.43 | (0.50 | ) | — | — | (0.50 | ) | (0.07 | ) | 10.52 | |||||||||||||||||||||||||||||
B | 10.54 | 0.41 | — | (0.06 | ) | 0.35 | (0.42 | ) | — | — | (0.42 | ) | (0.07 | ) | 10.47 | |||||||||||||||||||||||||||||
C | 10.61 | 0.42 | — | (0.07 | ) | 0.35 | (0.42 | ) | — | — | (0.42 | ) | (0.07 | ) | 10.54 | |||||||||||||||||||||||||||||
I | 10.60 | 0.53 | — | (0.07 | ) | 0.46 | (0.54 | ) | — | — | (0.54 | ) | (0.08 | ) | 10.52 | |||||||||||||||||||||||||||||
R3(f) | 10.76 | 0.41 | — | (0.14 | ) | 0.27 | (0.39 | ) | — | — | (0.39 | ) | (0.12 | ) | 10.64 | |||||||||||||||||||||||||||||
R4(f) | 10.76 | 0.42 | — | (0.12 | ) | 0.30 | (0.41 | ) | — | — | (0.41 | ) | (0.11 | ) | 10.65 | |||||||||||||||||||||||||||||
R5(f) | 10.76 | 0.43 | — | (0.12 | ) | 0.31 | (0.43 | ) | — | — | (0.43 | ) | (0.12 | ) | 10.64 | |||||||||||||||||||||||||||||
Y | 10.71 | 0.54 | — | (0.07 | ) | 0.47 | (0.54 | ) | — | — | (0.54 | ) | (0.07 | ) | 10.64 | |||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.62 | 0.41 | — | 0.04 | 0.45 | (0.42 | ) | (0.06 | ) | — | (0.48 | ) | (0.03 | ) | 10.59 | |||||||||||||||||||||||||||||
B | 10.57 | 0.33 | — | 0.04 | 0.37 | (0.34 | ) | (0.06 | ) | — | (0.40 | ) | (0.03 | ) | 10.54 | |||||||||||||||||||||||||||||
C | 10.64 | 0.34 | — | 0.03 | 0.37 | (0.34 | ) | (0.06 | ) | — | (0.40 | ) | (0.03 | ) | 10.61 | |||||||||||||||||||||||||||||
I(i) | 10.51 | 0.08 | — | 0.09 | 0.17 | (0.08 | ) | — | — | (0.08 | ) | 0.09 | 10.60 | |||||||||||||||||||||||||||||||
Y | 10.73 | 0.47 | — | 0.04 | 0.51 | (0.47 | ) | (0.06 | ) | — | (0.53 | ) | (0.02 | ) | 10.71 | |||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.95 | 0.35 | — | (0.24 | ) | 0.11 | (0.40 | ) | (0.04 | ) | — | (0.44 | ) | (0.33 | ) | 10.62 | ||||||||||||||||||||||||||||
B | 10.90 | 0.27 | — | (0.24 | ) | 0.03 | (0.32 | ) | (0.04 | ) | — | (0.36 | ) | (0.33 | ) | 10.57 | ||||||||||||||||||||||||||||
C | 10.97 | 0.29 | — | (0.25 | ) | 0.04 | (0.33 | ) | (0.04 | ) | — | (0.37 | ) | (0.33 | ) | 10.64 | ||||||||||||||||||||||||||||
Y | 11.06 | 0.40 | — | (0.24 | ) | 0.16 | (0.45 | ) | (0.04 | ) | — | (0.49 | ) | (0.33 | ) | 10.73 |
(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) | Expense ratios do not include expenses of the Underlying Funds. | |
(f) | Commenced operations on December 22, 2006. | |
(g) | Not annualized. | |
(h) | Annualized. | |
(i) | Commenced operations on August 31, 2006. |
34
Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | Ratio of Expenses to Average Net | ||||||||||||||||||||||
Assets Before Waivers and | Assets After Waivers and | Assets After Waivers and | Ratio of Net Investment | |||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Income to Average Net | Portfolio Turnover | |||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Assets | Rate(d) | ||||||||||||||||||
16.38% | $ | 816,191 | 1.03 | % (e) | 1.00 | % (e) | 1.00 | % (e) | 4.18 | % | 215 | % | ||||||||||||
15.60 | 83,760 | 1.95 | (e) | 1.68 | (e) | 1.68 | (e) | 3.51 | — | |||||||||||||||
15.48 | 119,568 | 1.76 | (e) | 1.75 | (e) | 1.75 | (e) | 3.42 | — | |||||||||||||||
16.65 | 10,680 | 0.77 | (e) | 0.75 | (e) | 0.75 | (e) | 4.36 | — | |||||||||||||||
16.19 | 1,836 | 1.42 | (e) | 1.25 | (e) | 1.25 | (e) | 3.65 | — | |||||||||||||||
16.39 | 21,920 | 0.98 | (e) | 0.98 | (e) | 0.98 | (e) | 4.17 | — | |||||||||||||||
16.73 | 408 | 0.69 | (e) | 0.69 | (e) | 0.69 | (e) | 4.35 | — | |||||||||||||||
16.87 | 926,793 | 0.58 | (e) | 0.58 | (e) | 0.58 | (e) | 4.57 | — | |||||||||||||||
(7.99) | 650,149 | 1.02 | 1.00 | 1.00 | 4.76 | 184 | ||||||||||||||||||
(8.68) | 73,557 | 1.93 | 1.71 | 1.71 | 4.05 | — | ||||||||||||||||||
(8.66) | 87,277 | 1.74 | 1.74 | 1.74 | 4.01 | — | ||||||||||||||||||
(7.62) | 6,128 | 0.68 | 0.68 | 0.68 | 5.10 | — | ||||||||||||||||||
(8.15) | 130 | 1.44 | 1.25 | 1.25 | 4.62 | — | ||||||||||||||||||
(7.98) | 12,698 | 0.99 | 0.99 | 0.99 | 4.81 | — | ||||||||||||||||||
(7.62) | 271 | 0.70 | 0.70 | 0.70 | 5.08 | — | ||||||||||||||||||
(7.62) | 559,555 | 0.59 | 0.59 | 0.59 | 5.19 | — | ||||||||||||||||||
4.11 | 601,301 | 1.07 | 1.00 | 1.00 | 4.71 | 268 | ||||||||||||||||||
3.36 | 82,376 | 1.96 | 1.75 | 1.75 | 3.95 | — | ||||||||||||||||||
3.33 | 84,793 | 1.78 | 1.75 | 1.75 | 3.95 | — | ||||||||||||||||||
4.42 | 3,050 | 0.72 | 0.72 | 0.72 | 5.04 | — | ||||||||||||||||||
2.59 (g) | 10 | 1.38 | (h) | 1.25 | (h) | 1.25 | (h) | 4.47 | (h) | — | ||||||||||||||
2.90 (g) | 2,928 | 1.09 | (h) | 1.00 | (h) | 1.00 | (h) | 4.95 | (h) | — | ||||||||||||||
2.97 (g) | 141 | 0.79 | (h) | 0.79 | (h) | 0.79 | (h) | 5.09 | (h) | — | ||||||||||||||
4.46 | 359,523 | 0.61 | 0.61 | 0.61 | 5.09 | — | ||||||||||||||||||
4.35 | 432,703 | 1.20 | 1.20 | 1.20 | 3.98 | 456 | ||||||||||||||||||
3.56 | 79,506 | 2.02 | 1.95 | 1.95 | 3.20 | — | ||||||||||||||||||
3.63 | 75,194 | 1.87 | 1.87 | 1.87 | 3.29 | — | ||||||||||||||||||
1.58 (g) | 38 | 1.01 | (h) | 0.91 | (h) | 0.91 | (h) | 4.78 | (h) | — | ||||||||||||||
4.89 | 285,255 | 0.70 | 0.70 | 0.70 | 4.48 | — | ||||||||||||||||||
1.00 | 311,557 | 1.24 | 1.20 | 1.20 | 3.24 | 195 | ||||||||||||||||||
0.25 | 81,028 | 2.00 | 1.95 | 1.95 | 2.49 | — | ||||||||||||||||||
0.34 | 74,039 | 1.87 | 1.87 | 1.87 | 2.56 | — | ||||||||||||||||||
1.45 | 188,156 | 0.73 | 0.73 | 0.73 | 3.73 | — |
35
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
December 15, 2009
36
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 Partner of TSG Ventures L.P., a private equity investment company. He has served for over thirty years as a financial services executive in banking, venture capital and private equity.
Ms. Jaffee served as Chairman (2008-2009) and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions from August 2005 to August 2009. From August 2004 to August 2005, Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm. 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.
37
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.
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. 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 President, Chief Executive Officer and Director for Hartford Life, Inc. (“HL, Inc.”). Mr. Walters also serves as President, Chairman of the Board, Chief Executive Officer and Director for Hartford Life Insurance Company (“Hartford Life”), and as Executive Vice President of The Hartford Financial Services Group, Inc. (“The Hartford”). In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”). Mr. Walters previously served as Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the U.S. Wealth Management Division of HL, Inc. (2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union Securities, the brokerage subsidiary of First Union Corp.
* | 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. Additionally, Mr. Arena is Senior Vice President and Director of Hartford Administrative Services Company, (“HASCO”), President, Chief Executive Officer and Manager of Hartford Investment Financial Services, LLC (“HIFSCO”) and President, Chief Executive Officer and Manager of 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.
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. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005.
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 from 2005 – 2006.
Dr. Froehlich joined The Hartford as Senior Managing Director in September 2009. Prior to joining The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management from 1997 – 2009.
38
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. 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 Vice President of Hartford Life and Chief Legal Officer, Secretary and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, 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. He also serves as Senior Vice President of HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual which he joined in 1987.
Mr. Sloane is a Senior Vice President of Hartford Life. 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.
39
Federal Tax Information (Unaudited)
U.S. Treasury* | 5.00 | % | ||
Other Direct Federal Obligations* | 2.00 | % | ||
Other Securities | 93.00 | % | ||
Total | 100.00 | % | ||
QII† | 90.00 | % |
* | The income received from federal obligations. | |
† | Applicable for non-resident foreign shareholders only. This is the percentage of ordinary income distribution that is designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C). |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.455 | N/A | N/A | 0.455 | ||||||||||||
Class B | 0.392 | N/A | N/A | 0.392 | ||||||||||||
Class C | 0.383 | N/A | N/A | 0.383 | ||||||||||||
Class I | 0.479 | N/A | N/A | 0.479 | ||||||||||||
Class R3 | 0.430 | N/A | N/A | 0.430 | ||||||||||||
Class R4 | 0.456 | N/A | N/A | 0.456 | ||||||||||||
Class R5 | 0.484 | N/A | N/A | 0.484 | ||||||||||||
Class Y | 0.494 | N/A | N/A | 0.494 |
40
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 | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,094.60 | $ | 5.28 | $ | 1,000.00 | $ | 1,020.16 | $ | 5.09 | 1.00 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,090.40 | $ | 8.90 | $ | 1,000.00 | $ | 1,016.69 | $ | 8.59 | 1.69 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,090.30 | $ | 9.22 | $ | 1,000.00 | $ | 1,016.38 | $ | 8.89 | 1.75 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,095.50 | $ | 4.01 | $ | 1,000.00 | $ | 1,021.37 | $ | 3.87 | 0.76 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,092.80 | $ | 6.59 | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1.25 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,094.40 | $ | 5.17 | $ | 1,000.00 | $ | 1,020.27 | $ | 4.99 | 0.98 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,096.00 | $ | 3.70 | $ | 1,000.00 | $ | 1,021.68 | $ | 3.57 | 0.70 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,096.60 | $ | 3.07 | $ | 1,000.00 | $ | 1,022.28 | $ | 2.96 | 0.58 | 184 | 365 |
41
Shareholder Meeting Results (Unaudited)
Fund Name | For | Against | Abstain | Uninstructed | ||||||||||||
The Hartford Income Allocation Fund | 3,477,331.92 | 76,987.15 | 237,874.41 | 361,190.00 |
42
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
43
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
44
45
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
46
47
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
20 | ||||
22 | ||||
23 | ||||
25 | ||||
25 | ||||
26 | ||||
27 | ||||
28 |
(subadvised by Wellington Management Company, LLP) | Investment objective — Seeks long-term total return. |
Growth of a $10,000 investment in Class A which includes Sales Charge
1 | 5 | Since | ||||||||||
Year | Year | Inception | ||||||||||
Value A# | 10.29 | % | 2.98 | % | 1.63 | % | ||||||
Value A## | 4.23 | % | 1.82 | % | 0.96 | % | ||||||
Value B# | 9.61 | % | 2.24 | % | NA | * | ||||||
Value B## | 4.61 | % | 1.87 | % | NA | * | ||||||
Value C# | 9.47 | % | 2.19 | % | 0.88 | % | ||||||
Value C## | 8.47 | % | 2.19 | % | 0.88 | % | ||||||
Value I# | 10.60 | % | 3.16 | % | 1.74 | % | ||||||
Value R3# | 9.92 | % | 3.01 | % | 1.76 | % | ||||||
Value R4# | 10.26 | % | 3.18 | % | 1.86 | % | ||||||
Value R5# | 10.65 | % | 3.38 | % | 1.97 | % | ||||||
Value Y# | 10.74 | % | 3.44 | % | 2.01 | % | ||||||
Russell 1000 Value Index | 4.78 | % | -0.05 | % | 1.38 | % |
# | 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, 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 10/31/09, which excludes investment transactions as of this date. | |
(4) | Effective 9/30/09, Class B shares of The Hartford Mutual Funds are closed to new investments. | |
(5) | Class I shares commenced operations on 5/31/07. Performance prior to 5/31/07 reflects Class A performance. Classes R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. |
Portfolio Managers | ||||
Karen H. Grimes, CFA | Ian R. Link, CFA | W. Michael Reckmeyer, III, CFA | ||
Senior Vice President | Vice President | Senior Vice President |
2
as of October 31, 2009
Percentage of | ||||
Industry (Sector) | Net Assets | |||
Automobiles & Components (Consumer Discretionary) | 0.6 | % | ||
Banks (Financials) | 5.2 | |||
Capital Goods (Industrials) | 10.1 | |||
Commercial & Professional Services (Industrials) | 1.0 | |||
Consumer Durables & Apparel (Consumer Discretionary) | 1.7 | |||
Diversified Financials (Financials) | 10.6 | |||
Energy (Energy) | 18.9 | |||
Food & Staples Retailing (Consumer Staples) | 2.5 | |||
Food, Beverage & Tobacco (Consumer Staples) | 4.3 | |||
Health Care Equipment & Services (Health Care) | 4.6 | |||
Household & Personal Products (Consumer Staples) | 0.8 | |||
Insurance (Financials) | 6.1 | |||
Materials (Materials) | 5.0 | |||
Media (Consumer Discretionary) | 1.4 | |||
Pharmaceuticals, Biotechnology & Life Sciences (Health Care) | 6.3 | |||
Retailing (Consumer Discretionary) | 4.3 | |||
Semiconductors & Semiconductor Equipment (Information Technology) | 2.7 | |||
Software & Services (Information Technology) | 1.7 | |||
Technology Hardware & Equipment (Information Technology) | 3.9 | |||
Telecommunication Services (Services) | 3.2 | |||
Transportation (Industrials) | 0.7 | |||
Utilities (Utilities) | 3.7 | |||
Short-Term Investments | 0.7 | |||
Other Assets and Liabilities | — | |||
Total | 100.0 | % | ||
3
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 99.3% | ||||||||
Automobiles & Components — 0.6% | ||||||||
336 | Ford Motor Co.• | $ | 2,349 | |||||
Banks — 5.2% | ||||||||
139 | PNC Financial Services Group, Inc. | 6,783 | ||||||
467 | Wells Fargo & Co. | 12,860 | ||||||
19,643 | ||||||||
Capital Goods — 10.1% | ||||||||
40 | Boeing Co. | 1,912 | ||||||
98 | Cummins, Inc. | 4,207 | ||||||
439 | General Electric Co. | 6,262 | ||||||
73 | Illinois Tool Works, Inc. | 3,334 | ||||||
209 | Ingersoll-Rand plc | 6,608 | ||||||
82 | PACCAR, Inc. | 3,064 | ||||||
30 | Precision Castparts Corp. | 2,904 | ||||||
131 | Stanley Works | 5,930 | ||||||
206 | Textron, Inc. | 3,666 | ||||||
37,887 | ||||||||
Commercial & Professional Services — 1.0% | ||||||||
124 | Waste Management, Inc. | 3,702 | ||||||
Consumer Durables & Apparel — 1.7% | ||||||||
81 | Coach, Inc. | 2,664 | ||||||
207 | Mattel, Inc. | 3,926 | ||||||
6,590 | ||||||||
Diversified Financials — 10.6% | ||||||||
65 | Ameriprise Financial, Inc. | 2,257 | ||||||
433 | Bank of America Corp. | 6,318 | ||||||
141 | Bank of New York Mellon Corp. | 3,758 | ||||||
65 | Goldman Sachs Group, Inc. | 11,078 | ||||||
343 | JP Morgan Chase & Co. | 14,340 | ||||||
122 | UBS AG ADR | 2,024 | ||||||
39,775 | ||||||||
Energy — 18.9% | ||||||||
55 | Apache Corp. | 5,186 | ||||||
161 | Baker Hughes, Inc. | 6,765 | ||||||
69 | BP plc ADR | 3,929 | ||||||
142 | Chevron Corp. | 10,830 | ||||||
77 | ConocoPhillips Holding Co. | 3,839 | ||||||
23 | EOG Resources, Inc. | 1,854 | ||||||
220 | Exxon Mobil Corp. | 15,789 | ||||||
56 | Hess Corp. | 3,066 | ||||||
133 | Marathon Oil Corp. | 4,265 | ||||||
58 | Newfield Exploration Co.• | 2,383 | ||||||
119 | Occidental Petroleum Corp. | 9,007 | ||||||
95 | XTO Energy, Inc. | 3,953 | ||||||
70,866 | ||||||||
Food & Staples Retailing — 2.5% | ||||||||
106 | CVS/Caremark Corp. | 3,724 | ||||||
119 | Kroger Co. | 2,750 | ||||||
107 | Sysco Corp. | 2,841 | ||||||
9,315 | ||||||||
Food, Beverage & Tobacco — 4.3% | ||||||||
31 | General Mills, Inc. | 2,057 | ||||||
107 | Nestle S.A. ADR | 4,975 | ||||||
79 | PepsiCo, Inc. | 4,777 | ||||||
87 | Philip Morris International, Inc. | 4,130 | ||||||
15,939 | ||||||||
Health Care Equipment & Services — 4.6% | ||||||||
85 | Baxter International, Inc. | 4,584 | ||||||
110 | Cardinal Health, Inc. | 3,109 | ||||||
93 | Covidien plc | 3,934 | ||||||
114 | UnitedHealth Group, Inc. | 2,953 | ||||||
51 | Zimmer Holdings, Inc.• | 2,702 | ||||||
17,282 | ||||||||
Household & Personal Products — 0.8% | ||||||||
52 | Kimberly-Clark Corp. | 3,186 | ||||||
Insurance — 6.1% | ||||||||
172 | ACE Ltd. | 8,849 | ||||||
93 | AON Corp. | 3,578 | ||||||
105 | Chubb Corp. | 5,109 | ||||||
66 | Principal Financial Group, Inc. | 1,648 | ||||||
193 | Unum Group | 3,840 | ||||||
23,024 | ||||||||
Materials — 5.0% | ||||||||
68 | Agrium U.S., Inc. | 3,192 | ||||||
154 | Cliff’s Natural Resources, Inc. | 5,471 | ||||||
55 | Dow Chemical Co. | 1,294 | ||||||
113 | E.I. DuPont de Nemours & Co. | 3,602 | ||||||
69 | Mosaic Co. | 3,243 | ||||||
89 | Rexam plc ADR | 2,023 | ||||||
18,825 | ||||||||
Media — 1.4% | ||||||||
355 | Comcast Corp. Class A | 5,142 | ||||||
Pharmaceuticals, Biotechnology & Life Sciences — 6.3% | ||||||||
80 | Abbott Laboratories | 4,056 | ||||||
58 | Johnson & Johnson | 3,401 | ||||||
150 | Merck & Co., Inc. | 4,649 | ||||||
474 | Pfizer, Inc. | 8,067 | ||||||
70 | Teva Pharmaceutical Industries Ltd. ADR | 3,508 | ||||||
23,681 | ||||||||
Retailing — 4.3% | ||||||||
84 | Gap, Inc. | 1,795 | ||||||
101 | Home Depot, Inc. | 2,532 | ||||||
72 | Kohl’s Corp.• | 4,109 | ||||||
168 | Staples, Inc. | 3,641 | ||||||
83 | Target Corp. | 4,005 | ||||||
16,082 | ||||||||
Semiconductors & Semiconductor Equipment — 2.7% | ||||||||
316 | Intel Corp. | 6,037 | ||||||
172 | Texas Instruments, Inc. | 4,029 | ||||||
10,066 | ||||||||
Software & Services — 1.7% | ||||||||
229 | Microsoft Corp. | 6,339 | ||||||
Technology Hardware & Equipment — 3.9% | ||||||||
266 | Cisco Systems, Inc.• | 6,087 | ||||||
113 | Hewlett-Packard Co. | 5,372 | ||||||
197 | Ingram Micro, Inc.• | 3,479 | ||||||
14,938 | ||||||||
Telecommunication Services — 3.2% | ||||||||
334 | AT&T, Inc. | 8,583 | ||||||
112 | Verizon Communications, Inc. | 3,308 | ||||||
11,891 | ||||||||
Transportation — 0.7% | ||||||||
50 | United Parcel Service, Inc. Class B | 2,695 | ||||||
4
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 99.3% — (continued) | ||||||||||||
Utilities — 3.7% | ||||||||||||
106 | Edison International | $ | 3,363 | |||||||||
53 | Entergy Corp. | 4,089 | ||||||||||
57 | Exelon Corp. | 2,686 | ||||||||||
73 | FPL Group, Inc. | 3,560 | ||||||||||
13,698 | ||||||||||||
Total common stocks (cost $359,402) | $ | 372,915 | ||||||||||
Total long-term investments (cost $359,402) | $ | 372,915 | ||||||||||
SHORT-TERM INVESTMENTS — 0.7% | ||||||||||||
Repurchase Agreements — 0.7% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $100, collateralized by GNMA 5.00%, 2039, value of $103) | ||||||||||||
$ | 100 | 0.08%, 10/30/2009 | $ | 100 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $590, collateralized by FHLMC 4.00% - 7.00%, 2011 - 2039, FNMA 4.00% - 7.00%, 2017 - 2047, value of $601) | ||||||||||||
590 | 0.08%, 10/30/2009 | 590 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $657, collateralized by FHLMC 6.00%, 2036, FNMA 7.00%, 2038, value of $670) | ||||||||||||
657 | 0.08%, 10/30/2009 | 657 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $7, collateralized by U.S. Treasury Note 2.75%, 2013, value of $7) | ||||||||||||
7 | 0.05%, 10/30/2009 | 7 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 11/02/2009 in the amount of $1,138, collateralized by FNMA 4.00% - 7.50%, 2016 - 2048, value of $1,161) | ||||||||||||
1,138 | 0.07%, 10/30/2009 | 1,138 | ||||||||||
2,492 | ||||||||||||
Total short-term investments (cost $2,492) | $ | 2,492 | ||||||||||
Total investments (cost $361,894)▲ | 100.0 | % | $ | 375,407 | ||||||||
Other assets and liabilities | — | % | (91 | ) | ||||||||
Total net assets | 100.0 | % | $ | 375,316 | ||||||||
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 4.6% of total net assets at October 31, 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 October 31, 2009, the cost of securities for federal income tax purposes was $365,045 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 36,116 | ||
Unrealized Depreciation | (25,754 | ) | ||
Net Unrealized Appreciation | $ | 10,362 | ||
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
5
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks ‡ | $ | 372,915 | $ | 372,915 | $ | — | $ | — | ||||||||
Short-Term Investments | 2,492 | — | 2,492 | — | ||||||||||||
Total | $ | 375,407 | $ | 372,915 | $ | 2,492 | $ | — | ||||||||
‡ | The Fund has all or primarily all of these equity securities categorized in a single level. Refer to the Schedule of Investments for further industry breakout. |
6
Assets: | ||||
Investments in securities, at market value (cost $361,894) | $ | 375,407 | ||
Cash | 50 | |||
Receivables: | ||||
Investment securities sold | 1,711 | |||
Fund shares sold | 150 | |||
Dividends and interest | 439 | |||
Other assets | 42 | |||
Total assets | 377,799 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 1,924 | |||
Fund shares redeemed | 460 | |||
Investment management fees | 51 | |||
Distribution fees | 5 | |||
Accrued expenses | 43 | |||
Total liabilities | 2,483 | |||
Net assets | $ | 375,316 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 428,700 | |||
Accumulated undistributed net investment income | 156 | |||
Accumulated net realized loss on investments | (67,053 | ) | ||
Unrealized appreciation of investments | 13,513 | |||
Net assets | $ | 375,316 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 9.63/$10.19 | ||
Shares outstanding | 5,993 | |||
Net assets | $ | 57,687 | ||
Class B: Net asset value per share | $ | 9.47 | ||
Shares outstanding | 769 | |||
Net assets | $ | 7,286 | ||
Class C: Net asset value per share | $ | 9.45 | ||
Shares outstanding | 1,121 | |||
Net assets | $ | 10,591 | ||
Class I: Net asset value per share | $ | 9.59 | ||
Shares outstanding | 264 | |||
Net assets | $ | 2,534 | ||
Class R3: Net asset value per share | $ | 9.47 | ||
Shares outstanding | 26 | |||
Net assets | $ | 248 | ||
Class R4: Net asset value per share | $ | 9.52 | ||
Shares outstanding | 17 | |||
Net assets | $ | 163 | ||
Class R5: Net asset value per share | $ | 9.55 | ||
Shares outstanding | �� | 1 | ||
Net assets | $ | 8 | ||
Class Y: Net asset value per share | $ | 9.55 | ||
Shares outstanding | 31,065 | |||
Net assets | $ | 296,799 | ||
7
Investment Income: | ||||
Dividends | $ | 8,508 | ||
Interest | 12 | |||
Securities lending | — | |||
Less: Foreign tax withheld | (63 | ) | ||
Total investment income | 8,457 | |||
Expenses: | ||||
Investment management fees | 2,587 | |||
Administrative services fees | — | |||
Transfer agent fees | 227 | |||
Distribution fees | ||||
Class A | 131 | |||
Class B | 69 | |||
Class C | 89 | |||
Class R3 | 1 | |||
Class R4 | — | |||
Custodian fees | 7 | |||
Accounting services fees | 45 | |||
Registration and filing fees | 87 | |||
Board of Directors’ fees | 10 | |||
Audit fees | 15 | |||
Other expenses | 72 | |||
Total expenses (before waivers and fees paid indirectly) | 3,340 | |||
Expense waivers | (29 | ) | ||
Transfer agent fee waivers | (18 | ) | ||
Commission recapture | (17 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (64 | ) | ||
Total expenses, net | 3,276 | |||
Net Investment Income | 5,181 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (45,951 | ) | ||
Net Realized Loss on Investments | (45,951 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 84,505 | |||
Net Changes in Unrealized Appreciation of Investments | 84,505 | |||
Net Gain on Investments | 38,554 | |||
Net Increase in Net Assets Resulting from Operations | $ | 43,735 | ||
8
For the | For the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2009 | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 5,181 | $ | 6,268 | ||||
Net realized loss on investments | (45,951 | ) | (21,083 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 84,505 | (132,595 | ) | |||||
Net Increase (Decrease) In Net Assets Resulting From Operations | 43,735 | (147,410 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (1,350 | ) | (680 | ) | ||||
Class B | (71 | ) | — | |||||
Class C | (90 | ) | (2 | ) | ||||
Class I | (39 | ) | (1 | ) | ||||
Class R3 | (4 | ) | — | |||||
Class R4 | (5 | ) | — | |||||
Class R5 | — | — | ||||||
Class Y | (8,841 | ) | (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 | (10,400 | ) | (23,322 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (2,129 | ) | 1,477 | |||||
Class B | (520 | ) | (1,181 | ) | ||||
Class C | 690 | 728 | ||||||
Class I | 1,692 | 678 | ||||||
Class R3 | 106 | 123 | ||||||
Class R4 | (14 | ) | 205 | |||||
Class R5 | — | 1 | ||||||
Class Y | 56,661 | 36,595 | ||||||
Net increase from capital share transactions | 56,486 | 38,626 | ||||||
Net Increase (Decrease) In Net Assets | 89,821 | (132,106 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 285,495 | 417,601 | ||||||
End of period | $ | 375,316 | $ | 285,495 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 156 | $ | 5,420 | ||||
9
1. | Organization: |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of forty-six 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 were 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 (See note below regarding the closing of Class B shares). 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 that Class B shares automatically convert to Class A shares after 8 years. |
Effective September 30, 2009, no new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After September 30, 2009, 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), or 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. For investors electing 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 September 30, 2009, 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 market, but before the close of the New York Stock Exchange (the “Exchange”) (generally 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
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, American Depositary Receipts, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the Valuation Time. 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 are 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. | |||
Foreign-denominated assets, including investment securities, and liabilities are translated from the local currency into U.S. dollars using exchange rates obtained from an independent third party as of the Fund’s 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. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized 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 may include 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 may include debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services, 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 or require significant management judgment or estimation. This category may include broker quoted securities 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 reasonable representation of exit price. |
11
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. | |||
During the year ended October 31, 2009, the Fund held no Level 3 securities, therefore no reconciliation of Level 3 securities is presented. | |||
Refer to the Investment Valuation Hierarchy Level Summary found following the Schedule of Investments. | |||
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 Wellington Management Company, LLP (“Wellington”). 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. To minimize counterparty risk, the 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 October 31, 2009. | ||
e) | 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 October 31, 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 may use 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 October 31, 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. |
12
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. 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 may include but are not limited to losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to Passive Foreign Investment Companies (“PFICs”), Real Estate Investment Trusts (“REITs”), Regulated Investment Companies (“RICs”), certain derivatives and partnerships. 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) | 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 RIC 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 intends to distribute substantially all of its income and capital 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) | Net Investment Income (Loss), Realized Gains and (Losses) – Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. The character of distributions made during the year from net investment income or realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. | ||
c) | Distributions and Components of Distributable Earnings – 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, 2009 | October 31, 2008 | |||||||
Ordinary Income | $ | 10,400 | $ | 13,907 | ||||
Long-Term Capital Gains * | — | 9,415 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
13
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 156 | ||
Accumulated Capital Losses * | (63,902 | ) | ||
Unrealized Appreciation † | 10,362 | |||
Total Accumulated Deficit | $ | (53,384 | ) | |
* | 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) may be attributable to the losses deferred due to wash sale adjustments, foreign currency gains and losses, adjustments related to PFICs, REITs, RICs, certain derivatives and partnerships. |
d) | Reclassification of Capital Accounts – The Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets 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. For the year ended October 31, 2009, the Fund recorded reclassifications to decrease accumulated undistributed net investment income by $45 and increase accumulated net realized gain on investments by $45. | ||
e) | Capital Loss Carryforward – At October 31, 2009 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year of Expiration | Amount | |||
2016 | $ | 17,720 | ||
2017 | 46,182 | |||
Total | $ | 63,902 | ||
f) | Accounting for Uncertainty in Income Taxes – Management has evaluated all open tax years and has determined there is no impact to the Fund’s financial statements related to uncertain tax positions. Generally, tax authorities can examine all tax returns filed for the last three years. |
4. | Expenses: |
a) | Investment Management Agreement – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. 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
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the year ended October 31, 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 services 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 year ended October 31, 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 a non-interest-bearing custody account. For the year ended October 31, 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: |
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.39 | % | 1.32 | % | 1.32 | % | 1.37 | % | 1.39 | % | ||||||||||
Class B Shares | 1.88 | 2.06 | 2.15 | 2.12 | 2.14 | |||||||||||||||
Class C Shares | 2.14 | 2.09 | 2.09 | 2.14 | 2.14 | |||||||||||||||
Class I Shares | 0.99 | 0.95 | 1.00 | * | ||||||||||||||||
Class R3 Shares | 1.62 | 1.65 | 1.65 | † | ||||||||||||||||
Class R4 Shares | 1.29 | 1.30 | 1.35 | † | ||||||||||||||||
Class R5 Shares | 0.97 | 0.98 | 1.05 | † | ||||||||||||||||
Class Y Shares | 0.87 | 0.87 | 0.88 | 0.91 | 0.92 |
* | From May 31, 2007 (commencement of operations), through October 31, 2007. | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007. |
15
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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 year ended October 31, 2009, HIFSCO received front-end load sales charges of $170 and contingent deferred sales charges of $20 from the Fund. | ||
The Fund has adopted a Distribution and Service Plan 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 Fund 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 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 year ended October 31, 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 year ended October 31, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by all the investment companies in the Hartford fund complex. The portion allocated to the Fund was 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 has contractually agreed to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for all classes. HASCO was compensated $204 for providing such services. These fees are accrued daily and paid monthly. | ||
Administrative services fees are paid to HASCO for third-party recordkeeping services that are payable as a percentage of net assets in the amount of 0.20%, 0.15% and 0.10% for Classes R3, R4 and R5 shares, respectively. The total administrative services fees are shown on the Statement of Operations. 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 | — | 16.60 | % | |||||
Class B | — | 15.62 | ||||||
Class C | — | 15.62 | ||||||
Class Y | — | 17.06 |
16
5. | Affiliate Holdings: | |
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R5 | 1 |
6. | Investment Transactions: | |
For the year ended October 31, 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 | $ | 217,901 | ||
Sales Proceeds Excluding U.S. Government Obligations | 158,132 |
7. | Capital Share Transactions: | |
The following information is for the year ended October 31, 2009 and the year ended October 31, 2008: |
For the Year Ended October 31, 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 | 2,423 | 150 | (2,931 | ) | — | (358 | ) | 1,461 | 353 | (1,764 | ) | — | 50 | |||||||||||||||||||||||||||||||
Amount | $ | 20,763 | $ | 1,265 | $ | (24,157 | ) | $ | — | $ | (2,129 | ) | $ | 16,895 | $ | 4,549 | $ | (19,967 | ) | $ | — | $ | 1,477 | |||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||
Shares | 229 | 8 | (294 | ) | — | (57 | ) | 161 | 45 | (322 | ) | — | (116 | ) | ||||||||||||||||||||||||||||||
Amount | $ | 1,838 | $ | 66 | $ | (2,424 | ) | $ | — | $ | (520 | ) | $ | 1,825 | $ | 568 | $ | (3,574 | ) | $ | — | $ | (1,181 | ) | ||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||
Shares | 407 | 10 | (346 | ) | — | 71 | 243 | 46 | (234 | ) | — | 55 | ||||||||||||||||||||||||||||||||
Amount | $ | 3,421 | $ | 82 | $ | (2,813 | ) | $ | — | $ | 690 | $ | 2,762 | $ | 586 | $ | (2,620 | ) | $ | — | $ | 728 | ||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||
Shares | 273 | 3 | (79 | ) | — | 197 | 74 | — | (11 | ) | — | 63 | ||||||||||||||||||||||||||||||||
Amount | $ | 2,348 | $ | 31 | $ | (687 | ) | $ | — | $ | 1,692 | $ | 805 | $ | 3 | $ | (130 | ) | $ | — | $ | 678 | ||||||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||||||
Shares | 13 | — | (1 | ) | — | 12 | 13 | 1 | — | — | 14 | |||||||||||||||||||||||||||||||||
Amount | $ | 109 | $ | 4 | $ | (7 | ) | $ | — | $ | 106 | $ | 122 | $ | 1 | $ | — | $ | — | $ | 123 | |||||||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||||||
Shares | 5 | 1 | (8 | ) | — | (2 | ) | 20 | — | (2 | ) | — | 18 | |||||||||||||||||||||||||||||||
Amount | $ | 45 | $ | 5 | $ | (64 | ) | $ | — | $ | (14 | ) | $ | 222 | $ | — | $ | (17 | ) | $ | — | $ | 205 | |||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||
Shares | 8,417 | 1,042 | (2,063 | ) | — | 7,396 | 4,179 | 1,356 | (3,282 | ) | — | 2,253 | ||||||||||||||||||||||||||||||||
Amount | $ | 66,473 | $ | 8,841 | $ | (18,653 | ) | $ | — | $ | 56,661 | $ | 48,573 | $ | 17,400 | $ | (29,378 | ) | $ | — | $ | 36,595 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued) for the year ended October 31, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Year Ended October 31, 2009 | 51 | $ | 478 | |||||
For the Year Ended October 31, 2008 | 31 | $ | 366 |
17
Notes to Financial Statements – (continued)
October 31, 2009
(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. This fee is allocated to all the Funds participating in the line of credit based on the average net assets of the Funds. During the year ended October 31, 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. | ||
10. | Subsequent Events: | |
Management has evaluated subsequent events through December 15, 2009, the date of issuance of the Fund’s financial statements, and has determined that no additional items require disclosure. |
18
Notes to Financial Statements
October 31, 2009
(000’s Omitted)
19
�� | ||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net Realized | Net Increase | ||||||||||||||||||||||||||||||||||||||||||
Value at | and Unrealized | Total from | Dividends from | Distributions | (Decrease) in | Net Asset | ||||||||||||||||||||||||||||||||||||||
Beginning of | Net Investment | Payments from | Gain (Loss) on | Investment | Net Investment | from Realized | Distributions | Total | Net Asset | Value at End | ||||||||||||||||||||||||||||||||||
Class | Period | Income (Loss) | (to) Affiliate | Investments | Operations | Income | Capital Gains | from Capital | Distributions | Value | of Period | |||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2009 (e) | ||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.95 | $ | 0.11 | $ | — | $ | 0.78 | $ | 0.89 | $ | (0.21 | ) | $ | — | $ | — | $ | (0.21 | ) | $ | 0.68 | $ | 9.63 | ||||||||||||||||||||
B | 8.73 | 0.06 | — | 0.77 | 0.83 | (0.09 | ) | — | — | (0.09 | ) | 0.74 | 9.47 | |||||||||||||||||||||||||||||||
C | 8.72 | 0.04 | — | 0.77 | 0.81 | (0.08 | ) | — | — | (0.08 | ) | 0.73 | 9.45 | |||||||||||||||||||||||||||||||
I | 8.97 | 0.10 | — | 0.81 | 0.91 | (0.29 | ) | — | — | (0.29 | ) | 0.62 | 9.59 | |||||||||||||||||||||||||||||||
R3 | 8.87 | 0.07 | — | 0.77 | 0.84 | (0.24 | ) | — | — | (0.24 | ) | 0.60 | 9.47 | |||||||||||||||||||||||||||||||
R4 | 8.89 | 0.11 | — | 0.77 | 0.88 | (0.25 | ) | — | — | (0.25 | ) | 0.63 | 9.52 | |||||||||||||||||||||||||||||||
R5 | 8.92 | 0.14 | — | 0.77 | 0.91 | (0.28 | ) | — | — | (0.28 | ) | 0.63 | 9.55 | |||||||||||||||||||||||||||||||
Y | 8.93 | 0.15 | — | 0.77 | 0.92 | (0.30 | ) | — | — | (0.30 | ) | 0.62 | 9.55 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
B | 13.78 | 0.08 | — | (4.49 | ) | (4.41 | ) | — | (0.64 | ) | — | (0.64 | ) | (5.05 | ) | 8.73 | ||||||||||||||||||||||||||||
C | 13.78 | 0.06 | — | (4.48 | ) | (4.42 | ) | — | (0.64 | ) | — | (0.64 | ) | (5.06 | ) | 8.72 | ||||||||||||||||||||||||||||
I | 14.15 | 0.17 | — | (4.56 | ) | (4.39 | ) | (0.15 | ) | (0.64 | ) | — | (0.79 | ) | (5.18 | ) | 8.97 | |||||||||||||||||||||||||||
R3 | 14.00 | 0.03 | — | (4.46 | ) | (4.43 | ) | (0.06 | ) | (0.64 | ) | — | (0.70 | ) | (5.13 | ) | 8.87 | |||||||||||||||||||||||||||
R4 | 14.03 | 0.08 | — | (4.48 | ) | (4.40 | ) | (0.10 | ) | (0.64 | ) | — | (0.74 | ) | (5.14 | ) | 8.89 | |||||||||||||||||||||||||||
R5 | 14.07 | 0.19 | — | (4.56 | ) | (4.37 | ) | (0.14 | ) | (0.64 | ) | — | (0.78 | ) | (5.15 | ) | 8.92 | |||||||||||||||||||||||||||
Y | 14.09 | 0.21 | — | (4.57 | ) | (4.36 | ) | (0.16 | ) | (0.64 | ) | — | (0.80 | ) | (5.16 | ) | 8.93 | |||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
A | 12.91 | 0.12 | — | 1.89 | 2.01 | — | (0.79 | ) | — | (0.79 | ) | 1.22 | 14.13 | |||||||||||||||||||||||||||||||
B | 12.71 | 0.01 | — | 1.85 | 1.86 | — | (0.79 | ) | — | (0.79 | ) | 1.07 | 13.78 | |||||||||||||||||||||||||||||||
C | 12.71 | 0.02 | — | 1.84 | 1.86 | — | (0.79 | ) | — | (0.79 | ) | 1.07 | 13.78 | |||||||||||||||||||||||||||||||
I(g) | 13.85 | 0.03 | — | 0.27 | 0.30 | — | — | — | — | 0.30 | 14.15 | |||||||||||||||||||||||||||||||||
R3(j) | 12.51 | 0.05 | — | 1.44 | 1.49 | — | — | — | — | 1.49 | 14.00 | |||||||||||||||||||||||||||||||||
R4(j) | 12.51 | 0.09 | — | 1.43 | 1.52 | — | — | — | — | 1.52 | 14.03 | |||||||||||||||||||||||||||||||||
R5(j) | 12.51 | 0.12 | — | 1.44 | 1.56 | — | — | — | — | 1.56 | 14.07 | |||||||||||||||||||||||||||||||||
Y | 12.91 | 0.09 | — | 1.97 | 2.06 | (0.09 | ) | (0.79 | ) | — | (0.88 | ) | 1.18 | 14.09 | ||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||
A | 10.79 | 0.09 | — | 2.11 | 2.20 | (0.08 | ) | — | — | (0.08 | ) | 2.12 | 12.91 | |||||||||||||||||||||||||||||||
B | 10.62 | 0.01 | — | 2.08 | 2.09 | — | — | — | — | 2.09 | 12.71 | |||||||||||||||||||||||||||||||||
C | 10.62 | 0.01 | — | 2.08 | 2.09 | — | — | — | — | 2.09 | 12.71 | |||||||||||||||||||||||||||||||||
Y | 10.79 | 0.15 | — | 2.10 | 2.25 | (0.13 | ) | — | — | (0.13 | ) | 2.12 | 12.91 | |||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||
A | 9.71 | 0.08 | — | 1.04 | 1.12 | (0.04 | ) | — | — | (0.04 | ) | 1.08 | 10.79 | |||||||||||||||||||||||||||||||
B | 9.60 | — | — | 1.02 | 1.02 | — | — | — | — | 1.02 | 10.62 | |||||||||||||||||||||||||||||||||
C | 9.60 | — | — | 1.02 | 1.02 | — | — | — | — | 1.02 | 10.62 | |||||||||||||||||||||||||||||||||
Y | 9.71 | 0.12 | — | 1.05 | 1.17 | (0.09 | ) | — | — | (0.09 | ) | 1.08 | 10.79 |
(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) | Total return without the inclusion of the Payments from (to) Affiliate, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(g) | Commenced operations on May 31, 2007. | |
(h) | Not annualized. | |
(i) | Annualized. | |
(j) | Commenced operations on December 22, 2006. |
20
Ratio of Expenses to Average | Ratio of Expenses to Average | Ratio of Expenses to Average | ||||||||||||||||||||||||
Net Assets Before Waivers and | Net Assets After Waivers and | Net Assets After Waivers and | Ratio of Net | |||||||||||||||||||||||
Net Assets at End of | Reimbursements and Including | Reimbursements and Including | Reimbursements and Excluding | Investment Income to | Portfolio | |||||||||||||||||||||
Total Return(b) | Period (000’s) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Expenses not Subject to Cap(c) | Average Net Assets | Turnover Rate(d) | ||||||||||||||||||||
10.29 | % | $ | 57,687 | 1.41 | % | 1.40 | % | 1.40 | % | 1.27 | % | 50 | % | |||||||||||||
9.61 | 7,286 | 2.43 | 1.89 | 1.89 | 0.77 | — | ||||||||||||||||||||
9.47 | 10,591 | 2.18 | 2.14 | 2.14 | 0.49 | — | ||||||||||||||||||||
10.60 | 2,534 | 1.00 | 1.00 | 1.00 | 1.24 | — | ||||||||||||||||||||
9.92 | 248 | 1.63 | 1.63 | 1.63 | 0.86 | — | ||||||||||||||||||||
10.26 | 163 | 1.29 | 1.29 | 1.29 | 1.36 | — | ||||||||||||||||||||
10.65 | 8 | 0.97 | 0.97 | 0.97 | 1.67 | — | ||||||||||||||||||||
10.74 | 296,799 | 0.88 | 0.88 | 0.88 | 1.73 | — | ||||||||||||||||||||
(33.00 | ) | 56,864 | 1.32 | 1.32 | 1.32 | 1.32 | 57 | |||||||||||||||||||
(33.43 | ) | 7,211 | 2.27 | 2.06 | 2.06 | 0.57 | — | |||||||||||||||||||
(33.50 | ) | 9,160 | 2.10 | 2.10 | 2.10 | 0.54 | — | |||||||||||||||||||
(32.67 | ) | 598 | 0.96 | 0.96 | 0.96 | 1.66 | — | |||||||||||||||||||
(33.14 | ) | 122 | 1.73 | 1.65 | 1.65 | 0.87 | — | |||||||||||||||||||
(32.93 | ) | 166 | 1.31 | 1.31 | 1.31 | 1.29 | — | |||||||||||||||||||
(32.71 | ) | 8 | 0.98 | 0.98 | 0.98 | 1.65 | — | |||||||||||||||||||
(32.65 | ) | 211,366 | 0.88 | 0.88 | 0.88 | 1.76 | — | |||||||||||||||||||
16.61 | (f) | 89,023 | 1.32 | 1.32 | 1.32 | 0.89 | 32 | |||||||||||||||||||
15.63 | (f) | 12,976 | 2.23 | 2.15 | 2.15 | 0.07 | — | |||||||||||||||||||
15.63 | (f) | 13,710 | 2.09 | 2.09 | 2.09 | 0.13 | — | |||||||||||||||||||
2.17 | (h) | 46 | 1.00 | (i) | 1.00 | (i) | 1.00 | (i) | 1.00 | (i) | — | |||||||||||||||
11.91 | (h) | 11 | 1.65 | (i) | 1.65 | (i) | 1.65 | (i) | 0.47 | (i) | — | |||||||||||||||
12.15 | (h) | 11 | 1.35 | (i) | 1.35 | (i) | 1.35 | (i) | 0.78 | (i) | — | |||||||||||||||
12.47 | (h) | 11 | 1.05 | (i) | 1.05 | (i) | 1.05 | (i) | 1.07 | (i) | — | |||||||||||||||
17.07 | (f) | 301,813 | 0.89 | 0.89 | 0.89 | 1.30 | — | |||||||||||||||||||
20.52 | 79,476 | 1.38 | 1.38 | 1.38 | 0.89 | 50 | ||||||||||||||||||||
19.68 | 11,957 | 2.29 | 2.13 | 2.13 | 0.15 | — | ||||||||||||||||||||
19.68 | 12,943 | 2.15 | 2.15 | 2.15 | 0.12 | — | ||||||||||||||||||||
21.07 | 72,054 | 0.92 | 0.92 | 0.92 | 1.36 | — | ||||||||||||||||||||
11.50 | 63,417 | 1.41 | 1.40 | 1.40 | 0.76 | 29 | ||||||||||||||||||||
10.62 | 10,091 | 2.34 | 2.15 | 2.15 | 0.01 | — | ||||||||||||||||||||
10.62 | 10,238 | 2.19 | 2.15 | 2.15 | 0.02 | — | ||||||||||||||||||||
12.06 | 60,218 | 0.93 | 0.93 | 0.93 | 1.19 | — |
21
The Hartford Mutual Funds, Inc.
December 15, 2009
22
23
Directors and Officers (Unaudited) — (continued)
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 - 2009). |
24
25
DRD* | 100.00 | % | ||
QDI† | 100.00 | % |
* | Income distributions, taxable as dividend income which qualify for deduction by corporations. | |
† | For the fiscal year ended October 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate ordinary distributions declared as taxed at a maximum rate of 15%. |
Short-Term | Long-Term | |||||||||||||||
Income | Capital Gain | Capital Gain | Total | |||||||||||||
Class A | 0.211 | N/A | N/A | 0.211 | ||||||||||||
Class B | 0.088 | N/A | N/A | 0.088 | ||||||||||||
Class C | 0.084 | N/A | N/A | 0.084 | ||||||||||||
Class I | 0.291 | N/A | N/A | 0.291 | ||||||||||||
Class R3 | 0.244 | N/A | N/A | 0.244 | ||||||||||||
Class R4 | 0.247 | N/A | N/A | 0.247 | ||||||||||||
Class R5 | 0.282 | N/A | N/A | 0.282 | ||||||||||||
Class Y | 0.298 | N/A | N/A | 0.298 |
26
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | April 30, 2009 | Beginning | Ending Account | April 30, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2009 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
April 30, 2009 | October 31, 2009 | October 31, 2009 | April 30, 2009 | October 31, 2009 | October 31, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,196.00 | $ | 7.75 | $ | 1,000.00 | $ | 1,018.15 | $ | 7.12 | 1.40 | % | 184 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,190.70 | $ | 10.77 | $ | 1,000.00 | $ | 1,015.38 | $ | 9.91 | 1.95 | 184 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,190.30 | $ | 11.98 | $ | 1,000.00 | $ | 1,014.27 | $ | 11.02 | 2.17 | 184 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,196.60 | $ | 5.54 | $ | 1,000.00 | $ | 1,020.16 | $ | 5.09 | 1.00 | 184 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,194.10 | $ | 8.96 | $ | 1,000.00 | $ | 1,017.04 | $ | 8.24 | 1.62 | 184 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,195.10 | $ | 7.08 | $ | 1,000.00 | $ | 1,018.75 | $ | 6.51 | 1.28 | 184 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,197.50 | $ | 5.15 | $ | 1,000.00 | $ | 1,020.52 | $ | 4.74 | 0.93 | 184 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,198.10 | $ | 4.71 | $ | 1,000.00 | $ | 1,020.92 | $ | 4.33 | 0.85 | 184 | 365 |
27
28
29
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited – (continued)
30
Mutual Funds | ||||||||
2008 | 2009 | |||||||
a Audit Fees | $ | 944,600 | $ | 997,500 | ||||
b Audit related fees | $ | 25,375 | $ | 41,339 | ||||
Audit-related services principally in connection with SEC Rule 17Ad-13 report. | ||||||||
c Tax Fees | $ | 224,569 | $ | 242,821 | ||||
d All other fees | $ | — | $ | — | ||||
e (1) | A copy of the Audit Committee’s pre-approval policies and procedures is attached as an exhibit. | |||||||
e (2) subject to pre approvel | One Hundred percent of the services described in items 4(b)through 4(d) were approved in accordance with the Audit Committee’s Pre-Approval Policy. As a result, none of such services was approved pursuant to paragraph (c) (7) (i) (c) of Rule 2-01 of Regulation S-X | |||||||
f hours | None of the hours expended on the principal accountant’s engagement to audit the Registrant’s financial statements for the year ended October 31, 2007, were attributed to work performed by persons other than the principal accountant’s full-time employees. | |||||||
g Non audit fees | $ | 1,240,963 | $ | 1,246,609 | ||||
h | The registrant’s Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
Sandra S. Jaffee
William P. Johnston
Phillip O. Peterson
(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. | ||
(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. | ||
12(a)(1) | Code of Ethics | ||
12(a)(2) | Audit Committee Pre-Approval Policies and Procedures |
THE HARTFORD MUTUAL FUNDS, INC. | ||||
Date: December 14, 2009 | By: | /s/ Robert M. Arena | ||
Robert M. Arena | ||||
Its: President | ||||
Date: December 14, 2009 | By: | /s/ Robert M. Arena | ||
Robert M. Arena | ||||
Its: President | ||||
Date: December 14, 2009 | By: | /s/ Tamara L. Fagely | ||
Tamara L. Fagely | ||||
Its: Vice President, Controller and Treasurer | ||||
99.CERT | 11(a | )(2) | Certifications | |||
(i) Section 302 certification of principal executive officer | ||||||
(ii) Section 302 certification of principal financial officer | ||||||
99.906CERT | 11(b | ) | Section 906 certification of principal executive officer and principal financial officer | |||
12(a | )(1) | Code of Ethics | ||||
12(a | )(2) | Audit Committee Pre-Approval Policies and Procedures |