N-CSR 1 b78592a1nvcsr.htm THE HARTFORD MUTUAL FUNDS, INC. The Hartford Mutual Funds, Inc.
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-07589
THE HARTFORD MUTUAL FUNDS, INC.
(Exact name of registrant as specified in charter)
P. O. Box 2999, Hartford, Connecticut 06104-2999
(Address of Principal Executive Offices)
Edward P. Macdonald, Esquire
Life Law Unit
The Hartford Financial Services Group, Inc.
200 Hopmeadow Street
Simsbury, Connecticut 06089
(Name and Address of Agent for Service)
Registrant’s telephone number, including area code: (860) 843-9934
Date of fiscal year end: October 31st
Date of reporting period: November 1, 2008 – October 31, 2009
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
 
 

 

 

Item 1. Reports to Stockholders.

 

 

(THE HARTFORD LOGO)             
(THE HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford Advisers Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    5  
 
    10  
 
    11  
 
    12  
 
    13  
 
    14  
 
    26  
 
    28  
 
    29  
 
    31  
 
    31  
 
    32  
 
    33  
 
    34  

 

 

The Hartford Advisers Fund inception 07/22/1996
(subadvised by Wellington Management Company, LLP)   Investment objective — Seeks maximum long-term total return.
Performance Overview(1) 10/31/99 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE-GRAPH)
Barclays Capital Government/Credit Bond Index is an unmanaged, market value-weighted index of all debt obligations of the U.S. Treasury and U.S. Government agencies (excluding mortgage-backed securities) and of all publicly issued fixed-rate, nonconvertible, investment grade domestic corporate debt.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1)   Growth of a $10,000 investment in Classes B, C, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   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
How did the Fund perform?
The Class A shares of The Hartford Advisers Fund returned 20.47%, before sales charge, for the twelve-month period ended October 31, 2009, versus the returns of 9.78% for the S&P 500 Index, 14.60% for the Barclays Capital Government/Credit Bond Index and 16.15% for the average fund in the Lipper Mixed-Asset Target Allocation Growth Funds peer group, a group of funds that hold between 60%-80% in equity securities, with the remainder invested in bonds, cash, and cash equivalents.
Why did the Fund perform this way?
The twelve-month period ending October 31, 2009, was one of the most volatile in capital markets history. Following the collapse of Lehman Brothers, credit markets froze as investors fled to the safety of Treasuries, and liquidity in non-government fixed income markets evaporated. In

2

 

December, the Federal Reserve cut its target rate from 1.0% to a target range of 0.0% - 0.25%. In addition, numerous government stimulus and liquidity programs were introduced. Early in 2009, signs of market and global economic stabilization materialized as the impact of unprecedented government intervention began to filter through to markets and the broader economy. After peaking in the fourth quarter, credit risk premiums (i.e. difference between the risk associated with buying or holding a Treasury and holding a high yield bond) rapidly and materially compressed in 2009. This compression was largely due to the government programs which restored liquidity and confidence to markets. As the economic outlook improved and fears of a severe and prolonged recession diminished, investors re-allocated funds into riskier assets, largely favoring non-Treasury securities. The persistence of low cash rates provided additional momentum to this technical trend. For the twelve-month period, Treasury yields moved lower and the yield curve steepened (i.e. short and long term interest rates moving farther apart). All non-government sectors meaningfully outperformed Treasuries. The U.S. equity markets experienced two significantly different market environments during the period: from November through early March stocks fell sharply, reflecting deepening economic worries and concerns over the U.S. government’s increasing involvement in the economy, but beginning in early March stocks rallied through September as investors came to believe that a Depression-like scenario was less likely.
Equity markets, as measured by the S&P 500 Index, returned 9.8% during the period, as nine of ten sectors within the index rose. Information Technology (32%), Consumer Discretionary (21%), and Materials (16%) gained the most, while Financials (-8%) was the only sector to post negative returns. Utilities (+2%) and Industrials (+3%) also lagged. The bond market, as measured by the Barclays Capital Government/Credit Index, returned 14.6% during the period.
The Fund has three primary levers to generate investment performance: equity investments, fixed income investments, and asset allocation among stocks, bonds, and cash. During the period, both the equity and fixed income portions of the Fund outperformed their respective benchmarks. Asset Allocation detracted modestly from the Fund’s performance as the Fund’s overweight (i.e. the Fund’s sector position was greater than the benchmark position) to equities and underweight (i.e. the Fund’s sector position was less than the benchmark position) to fixed income hurt relative (i.e. performance of the Fund as measured against the benchmark) returns in a period when fixed income returns exceeded equity returns.
The equity portion of the Fund’s outperformance versus the benchmark was driven by security selection, which was strongest in Financials, Health Care, and Energy. Sector positioning, which is a result of bottom-up (i.e. stock by stock fundamental research) security selection, also contributed to benchmark-relative returns, largely due to the equity portion of the Fund’s overweights to Information Technology and Consumer Discretionary and underweight allocation to Health Care.
Top contributors to benchmark-relative performance in the equity portion of the Fund during the period included Goldman Sachs (Financials), Wyeth (Health Care), and Schering-Plough (Health Care). Shares of Goldman Sachs, a leading investment bank, benefited from the firm’s relatively healthy balance sheet and the company’s ability to pay back its government Troubled Asset Relief Program (TARP) loans sooner than had been expected. Surging underwriting activity also boosted its share price. Shares of U.S.-based pharmaceutical company Wyeth moved sharply higher after Pfizer agreed to purchase the company at a significant premium. The Fund’s holding in Schering-Plough helped performance on an absolute (i.e. total return) and relative basis, as the company’s share price jumped after receiving a takeover offer by Merck. Apple (Information Technology) also contributed to the Fund’s absolute performance.
Stocks that detracted the most from relative returns during the period were Delta Air Lines (Industrials), General Electric (Industrials), and Elan Corp (Health Care). Delta Airlines’ shares fell during the period on the back of soft revenue metrics and a general contraction in demand across the travel industry, which investors feared would overshadow the benefits of industry-wide capacity reductions. General Electric, a U.S. industrial conglomerate, saw its shares fall after the company cut its dividend and investors grew increasingly concerned about the company’s finance unit. Shares of Elan Corp declined on news that the European regulators began reviewing Tysabri, a drug used to treat multiple sclerosis, amid concerns over the drug’s potential side effects. Significant detractors from absolute returns also included Bank of America (Financials) and Merrill Lynch (Financials).
The primary drivers of outperformance in the fixed income sleeve of the Fund were the allocations to consumer asset-backed securities (ABS) and agency mortgage-backed securities (MBS), an overweight allocation to the credit sector, and security selection within the credit sector. Detracting from performance were the Fund’s allocations to commercial mortgage backed securities (CMBS) and non-agency MBS, both of which were eliminated during the time period.
As noted, contributing positively to relative results was the Fund’s overweight to the credit sector. The Fund was positioned with an overweight to corporate bonds, as we believed that the default levels implied by pricing were too high and that liquidity would improve as government programs took effect. Improvements in the economy and market liquidity conditions, better-than-expected corporate profitability, and surging demand for corporate bonds led to the outperformance of the sector. Within the sector, the Fund held an overweight to the debt of Financial issuers, in particular banks, insurance companies, and REITS. Positive earnings surprises and better-than-expected stress test results for the banks, the extension of TARP capital to insurance companies, and successful capital raises for financial institutions all led to the outperformance of Financial issuers in the latter half of the period. The Fund’s allocation to agency MBS pass-throughs was also additive as agency MBS benefitted from the initiation and expansion of the Federal Reserve’s $1.25 trillion purchase program. Lastly, the Fund’s ABS holdings backed by auto and credit card receivables contributed positively to performance as the introduction of the Term Asset-Backed Securities Loan Facility (TALF) increased demand for consumer ABS.
CMBS prices tumbled in the first half of the period as the weakening economic outlook for commercial real estate intensified. We exited the Fund’s CMBS holdings in the first quarter. In late 2008, a shift in focus for the Troubled Assets Relief Program away from the purchase of illiquid mortgage assets, combined with continued declines in the housing market, led to significant underperformance for the non-agency MBS sector. We sold the Fund’s non-agency MBS positions on improved liquidity in January.

3

 

What is the outlook?
We continue to believe that government actions will further reduce systemic risk and help to stabilize markets.
The equity portion of the Fund is managed with a large cap, core approach. We apply a bottom-up investment process in constructing a diversified portfolio. We look for companies that exhibit the following qualities: industry leadership, strong balance sheets, solid management, high return on equity, accelerating earnings, and/or attractive valuation with a catalyst. At the end of the period, our bottom-up investment approach resulted in overweight exposures in Industrials, Information Technology, and Energy, as we found a number of attractive investment opportunities in these sectors. The Fund’s largest underweights relative to the S&P 500 Index were in Telecommunication Services, Utilities, and Materials.
Signs of a recovery in the U.S. economy continue to materialize and U.S. economic indicators, in particular manufacturing data, are improving. Government intervention has reduced systemic risk and we believe that the risks of a severe and prolonged global recession are diminishing. However, a sluggish housing market and weak employment remain headwinds. We believe that the economic recovery will be muted and that the Federal Reserve (Fed) will keep the policy rate low for an extended period of time. As a result, we anticipate that interest rates will remain range-bound and are maintaining a neutral duration posture for the fixed income portion of the Fund relative to the benchmark. Should the economic news prove to be materially different form our expectations we will look to reposition the Fund’s interest rate sensitivity accordingly. We continue to have a constructive view on risk assets as fundamentals have improved and valuations remain attractive from a historic perspective. As a result, at the end of the period the Fund was positioned with an overweight to the corporate bond sector. Agency mortgages are liquid and the Fed continues to support the sector through its purchases. We therefore maintained a modest allocation to agency MBS. Lastly, we believe that consumer fundamentals are improving and that support for consumer ABS from TALF-related demand will persist. The Fund’s ABS exposure consisted primarily of senior classes of consumer ABS credit card deals at the end of the period.
The equity and fixed income managers will continue to work collaboratively to make decisions regarding portfolio weights in stocks, bonds, and cash. As of October 31, 2009, the Fund’s equity exposure was at 66.1% compared to 60% in its benchmark and at the upper end of the 50-70% range.
Diversification by Security Type
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 %
 
        
Diversification by Industry
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

 

The Hartford Advisers Fund
Schedule of Investments
October 31, 2009
(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  
       
 
      
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Advisers Fund
Schedule of Investments — (continued)
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  
The accompanying notes are an integral part of these financial statements.

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  
       
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Advisers Fund
Schedule of Investments — (continued)
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  
       
 
            
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Advisers Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
                                         
    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.
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford Advisers Fund
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Advisers Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford Advisers Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford Advisers Fund
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 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

 

The Hartford Advisers Fund
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

 

The Hartford Advisers Fund
Notes to Financial Statements — (continued)
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.
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

19

 

The Hartford Advisers Fund
Notes to Financial Statements — (continued)
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.
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
   $ 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.
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.

21

 

The Hartford Advisers Fund
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
     0.6900 %
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

 

The Hartford Advisers Fund
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 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  
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 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
   $ 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

 

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
     4,259       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 )
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
     1,452     $ 15,686  
For the Year Ended October 31, 2008
     2,044     $ 30,041  
9. Line of Credit:
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. 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.

25

 

The Hartford Advisers Fund
Financial Highlights
– 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
   $ 10.80     $ 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

 

– Ratios and Supplemental Data –
                                                         
                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 Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Advisers Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Advisers Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

28

 

The Hartford Advisers Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Advisers Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

31

 

The Hartford Advisers Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

32

 

The Hartford Advisers Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)            
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Advisers Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Advisers Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

34

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record. The Board noted HIFSCO’s initiatives over the course of the year to address performance issues.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and

35

 

The Hartford Advisers Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

36

 

The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

37

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-1 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06115

 

 

(THE HARTFORD LOGO)             
(THE HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford Balanced Allocation Fund
Table of Contents
         
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.
Performance Overview(1) 5/28/04 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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
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
How did the Fund perform?
The Class A shares of The Hartford Balanced Allocation Fund returned 18.01%, before sales charges, 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 Allocation Moderate category, a group of funds with investment strategies similar to those of the Fund, was 16.01%.
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

 

During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Within fixed income, yields decreased during the year, with the ten-year Treasury note yield falling 57 basis points to 3.38% and the five-year Treasury note yield falling 52 basis points to 2.31%. Within the major sectors of the Barclays Capital U.S. Aggregate Index, Credit was the top performer, while Agency securities were the worst. High Yield asset classes such as U.S. high yield bonds, floating rate notes, and Emerging Market Debt significantly outperformed the Barclays Capital U.S. Aggregate Index. The Barclays Capital High Yield index posted strong results, up 48.1% over the period.
Generally, the Fund’s target asset allocation is set at approximately 60% equities and 40% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the fund’s performance. Specifically, favorable allocations within the international markets into emerging markets, international small-cap, and international real estate investment trusts (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The Fund’s strategic asset allocation decisions within fixed income detracted from performance. Although the Fund benefited from exposures to high yield asset classes, diversification within these high yield asset classes detracted from results. The Fund’s duration (i.e. sensitivity to changes in interest rates) was targeted to be less than the Barclays Capital U.S. Aggregate Index, a decision based on the risk preferences of the Fund. For the year, duration positioning detracted from performance.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it has behaved historically. Finally a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our underlying fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). A hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required in March 09 to restore the Fund allocations back to their targets.
During the period, the Fund has continued to utilize exchange traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Specifically, the fund has set target allocations to ETFs that provide U.S. real estate, international real estate, and emerging market debt exposure.
What is the Outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters. We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2%-3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there are no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months–3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
We have positioned the Fund with an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to international equities, both large and small cap, while reducing our high yield and floating rate note exposure to a more neutral weight as they are approaching fair value on the back of improved fundamentals. In addition, we have reversed the underweight in inflation protected securities.
Composition by Investments
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

 

The Hartford Balanced Allocation Fund
Schedule of Investments
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  
       
 
            
 
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 $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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Balanced Allocation Fund
Investment Valuation Hierarchy Level Summary
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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Balanced Allocation Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Balanced Allocation Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Balanced Allocation Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Balanced Allocation Fund
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 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

 

The Hartford Balanced Allocation Fund
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 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

 

The Hartford Balanced Allocation Fund
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
   $ 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

 

The Hartford Balanced Allocation Fund
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 $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

 

The Hartford Balanced Allocation Fund
Financial Highlights
– 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
   $ 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

 

– 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)
                                                       
 
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Balanced Allocation Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Balanced Allocation Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Balanced Allocation Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Balanced Allocation Fund
Directors and Officers (Unaudited) – (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

21

 

The Hartford Balanced Allocation Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Balanced Allocation Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Balanced Allocation Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Balanced Allocation Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund

24

 

Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In

25

 

The Hartford Balanced Allocation Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

26

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-2 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06115

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford Balanced Income Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    5  
 
    17  
 
    18  
 
    19  
 
    20  
 
    21  
 
    32  
 
    34  
 
    35  
 
    37  
 
    37  
 
    38  
 
    39  
 
    40  

 

 

The Hartford Balanced Income Fund inception 07/31/2006
(subadvised by Wellington Management Company, LLP)
  Investment objective — Seeks to provide current income with
growth of capital as a secondary objective.
Performance Overview(1) 7/31/06 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Barclays Capital Corporate Index is an unmanaged index and is the Corporate component of the U.S. Credit Index within the Barclays Capital U.S. Aggregate Bond Index.
Russell 1000 Value Index is an unmanaged index measuring the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                 
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1)   Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC.
 
(3)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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    
How did the Fund perform?
The Class A shares of The Hartford Balanced Income Fund returned 20.29%, before sales charge, for the twelve-month period ended October 31, 2009, versus the returns of 4.78% for the Russell 1000 Value Index, 31.07% for the Barclays Capital Corporate Index and 16.01% for the average fund in the Lipper Mixed-Asset Target Allocation Moderate Funds peer group, a group of funds that hold between 40-60% in equity securities and the remainder in bonds, cash and cash equivalents.
Why did the Fund perform this way?
Investors were forced to navigate widely varied markets during the period. Stocks fell sharply from the beginning of November through early

2

 

March, reflecting deepening economic worries and concerns over the U.S. government’s increasing involvement in the economy. From early March through the end of October stocks rallied and credit spreads tightened (i.e. short and long term interest rates moving closer together) as investors came to believe that a Depression-like scenario was less likely. The Russell 1000 Value Index rose [+5%] during the period. Sector returns within the Russell 1000 Value Index diverged widely, with Information Technology (+33%), Consumer Discretionary (+23%), and Materials (+18%) performing best, while the relatively weaker Financials (-8%), Industrials (-5%), and Utilities (+2%) sectors lagged.
Within the fixed income markets corporate bonds, emerging markets debt, and high yield bonds all performed well over the period, with all three components of the Fund’s fixed income benchmark rising materially. High-yield securities, as measured by the Barclays Capital High Yield (2% issuer cap) Index, gained 49%, while emerging markets bonds, as measured by the JP Morgan EMBI+ Emerging Markets Bond Index, rose 37%. Investment grade corporate securities, as measured by the Barclays Capital Corporate Index, were up 31% during the period.
The Fund’s equity component outperformed its benchmark due to strong stock selection. Stock selection was particularly strong within the Industrials, Energy, and Utilities sectors. This more than offset weak stock selection in Materials, Consumer Discretionary, and Financials. Allocation among sectors, which is driven by bottom-up (i.e. stock by stock fundamental research) fundamental research, detracted from benchmark-relative returns primarily due to an underweight (i.e. the Fund’s sector position was less than the benchmark position) to Financials during the better part of the period when Financials rallied.
Among the top contributors to benchmark-relative returns in the equity sleeve were Citigroup (Financials), FPL Group (Utilities), and Toronto-Dominion Bank (Financials). We did not own the shares of Citigroup during the period, which benefited relative results as its share price fell during the period and the company is a significant benchmark holding. Despite a recent lowering of guidance, shares of Florida-based electricity provider FPL Group gained over the period on strong quarterly results. Shares of Toronto-Dominion Bank, a Canada-based bank with significant U.S. operations, rose as the company reported better-than-expected quarterly earnings. Top absolute (i.e. total return) contributors for the period included global pharmaceutical company Merck and worldwide banking and financial services organization HSBC Holdings.
PNC Financial (Financials), JPMorgan Chase (Financials), and Wells Fargo (Financials), detracted most from benchmark-relative and absolute returns in the equity sleeve. Shares of financial services firm PNC Financial fell on concerns regarding the value of assets held at acquired National City. JPMorgan Chase saw its shares pressured by fears that the company’s exposures to consumer and large corporate credit would lead to an earnings shortfall and greater balance sheet uncertainty. Wells Fargo shares fell sharply as investors became concerned about the potential negative impact of the Wachovia acquisition to the company’s balance sheet and the possibility that Wells Fargo may have to cut its dividend. During the period all three companies were forced to announce dividend cuts, making them unsuitable holdings given the Fund’s focus on income-generating stocks. We eliminated our holdings in all three companies during the period.
The Fund’s fixed income sleeve modestly outperformed its benchmark for the period. The Fund’s overweight (i.e. the Fund’s sector position was greater than the benchmark position) to emerging markets debt and high yield bonds contributed positively to relative results. Security selection within the emerging markets debt allocation was also additive in particular, the Fund’s overweight exposure to the U.S. dollar denominated sovereign debt of Pakistan. Security selection within the investment grade corporate bond allocation detracted from relative results, specifically the Fund’s exposure within the Banking sector.
Asset allocation between equities and fixed-income contributed positively to relative returns. The Fund benefited from a slight underweight in equities in the first half of the period and a slight overweight in the second half of the period.
What is the outlook?
The equity market’s sharp rally off its March lows has narrowed or eliminated many previously-attractive disparities between market price and our assessment of fair value in equity securities. The strength of the rally suggests that investors are pricing in not just the removal of the worst-case scenario, but a robust economic recovery. While recent economic releases point to an improvement from the dire outlook of early 2009, the U.S. economy is by no means out of the woods. Consumer and corporate debt levels remain high, unemployment persists near 10%, and the government’s unprecedented monetary and fiscal stimulus has raised the specter of inflation down the road.
In the equity portion of the Fund we continue to focus on building an equity portfolio in which growth and the dividend yield are better than the market and valuations are lower than the market. Based on bottom-up stock decisions, we ended the period most overweight the Consumer Staples, Industrials, and Health Care sectors; our largest underweights were in Financials, Energy, and Telecommunication Services.
The government policies aimed at supporting the liquidity and smooth functioning of the fixed-income credit markets have been successful in resuscitating the sector. We remain constructive on our outlook for the corporate bond market and find credit risk premiums (i.e. difference between the risk associated with buying or holding a Treasury and holding a high yield bond) to be generous relative to past economic contractions. Although we do not expect excess returns for the remainder of the year and 2010 to be as strong as performance was in the first ten months of 2009, we do believe that credit spreads will tighten (i.e. short and long term interest rates moving closer together) further. From a sector standpoint, we continue to favor financial issuers including the large, money-center banks, insurance companies and REITS, all of which are attractively valued. Within Industrials, we held an overweight to communications issuers at the end of the period, favoring their healthy cash flow prospects, and an underweight to defensive non-cyclical issuers.
In the high-yield sector, valuations remain attractive. Though it is likely that high yield bonds will experience an elevated level of defaults over the next year, we believe the market’s yield is more than enough to achieve an attractive total return. Similarly, despite the recent rally in credit spreads, we continue to maintain a constructive stance on emerging markets debt. Emerging market economies have performed particularly well this year. From a valuation standpoint, we believe that there is still room for spreads to tighten further given the strong technical backdrop and improving fundamentals across many developing economies.

3

 

Diversification by Industry
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 %
 
        
Diversification by Security Type
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

 

The Hartford Balanced Income Fund
Schedule of Investments
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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Balanced Income Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Balanced Income Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
       
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Balanced Income Fund
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Balanced Income Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford Balanced Income Fund
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  
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

15

 

The Hartford Balanced Income Fund
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
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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 )
 
                              
Futures Contracts Outstanding at October 31, 2009
                                 
                            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.
The accompanying notes are an integral part of these financial statements.

16

 

The Hartford Balanced Income Fund
Investment Valuation Hierarchy Level Summary
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.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
                                                 
    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.
The accompanying notes are an integral part of these financial statements.

17

 

The Hartford Balanced Income Fund
Statement of Assets and Liabilities
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

 

The Hartford Balanced Income Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

19

 

The Hartford Balanced Income Fund
Statement of Changes in Net Assets
(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  
 
            
The accompanying notes are an integral part of these financial statements.

20

 

The Hartford Balanced Income Fund
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 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

 

The Hartford Balanced Income Fund
Notes to Financial Statements – (continued)
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

 

The Hartford Balanced Income Fund
Notes to Financial Statements – (continued)
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

 

The Hartford Balanced Income Fund
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  
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).
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:
         
    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

 

The Hartford Balanced Income Fund
Notes to Financial Statements – (continued)
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

 

The Hartford Balanced Income Fund
Notes to Financial Statements – (continued)
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

 

The Hartford Balanced Income Fund
Financial Highlights
- Selected Per-Share Date (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
   $ 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

 

- 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)
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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Balanced Income Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Balanced Income Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

34

 

The Hartford Balanced Income Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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.

35

 

The Hartford Balanced Income Fund
Directors and Officers (Unaudited) – (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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.

36

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

37

 

The Hartford Balanced Income Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

38

 

The Hartford Balanced Income Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

AThe Hartford Balanced Income Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Balanced Income Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

40

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the

41

 

The Hartford Balanced Income Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.

42

 

The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

43

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-3 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06115

 

(THE HARTFORD LOGO)
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The Hartford Capital Appreciation Fund
Table of Contents
         
Manager Discussions (Unaudited)
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Financial Statements
        
 
        
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The Hartford Capital Appreciation Fund inception 07/22/1996
(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.

(LINE GRAPH)
Russell 3000 Index is an unmanaged index that measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
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
    
Saul J. Pannell, CFA
   Frank D. Catrickes, CFA, CMT
Senior Vice President, Partner
   Senior Vice President, Partner
How did the Fund perform?
The Class A shares of The Hartford Capital Appreciation Fund returned 21.45%, before sales charge, for the twelve-month period ended October 31, 2009, outperforming its benchmark, the Russell 3000 Index, which returned 10.83% for the same period. The Fund also outperformed the 14.23% return of the average fund in the Lipper Multi-Cap Core Funds peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
Broad U.S. equity markets rose during the period, but this result masks two significantly different market environments. From the beginning of November through early March stocks fell sharply, reflecting deepening economic worries and concerns over the U.S. government’s increasing involvement in the economy. From early March through the middle of October stocks rebounded strongly as investors came to believe that a Depression-like scenario was less likely. Sector returns within the Russell 3000 Index diverged widely in this environment, with strong returns in Information Technology (+31%), Consumer Discretionary (+25%), and Materials (+21%) overpowering the lagging Financials (-7%), Utilities (+3%), and Industrials (+4%) sectors.

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The Fund outperformed its benchmark due to strong stock selection. Fund results exceeded those of the benchmark in seven of ten economic sectors, with the largest outperformance in Financials, Energy, and Health Care. Selection was weaker in the Industrials, Telecommunications Services, and Utilities sectors. Allocation among sectors, a result of the bottom-up (i.e. stock by stock fundamental research) stock selection process, detracted from relative (i.e. performance of the Fund as measured against the benchmark) performance, largely due to overweight (i.e. the Fund’s sector position was greater than the benchmark position) positions in the lagging Health Care and Financials sectors and an underweight (i.e. the Fund’s sector position was less than the benchmark position) in the Energy sector. The Fund’s modest cash position detracted slightly from relative performance as equity markets rose during the period.
The largest contributors to relative and absolute (i.e. total return) returns were Ford Motor (Consumer Discretionary), Schering-Plough (Health Care), and Goldman Sachs (Financials). Shares in auto manufacturer Ford rose as the company was better able to weather an exceedingly difficult environment for new car sales than its U.S. competitors, in part because the company had embarked upon a major restructuring effort prior to the economic downturn. Schering-Plough, a global health care company, saw its shares rise on news of a definitive merger agreement with Merck. Shares of investment bank and bank holding company Goldman Sachs moved higher as investors were attracted to the firm’s relatively clean balance sheet, and improved competitive positioning within the investment banking industry. Investors were also pleased by the company’s repayment of Troubled Asset Relief Program (TARP) funds.
ACE (Financials), Bank of America (Financials), and General Electric (Industrials) detracted most from relative returns. ACE, a global property and casualty insurance company, saw its shares trade lower on concerns about corporate bonds held in its investment portfolio. Shares of Bank of America fell during the first half of the period on concerns over weakness in its consumer-oriented loan portfolio and fears that it may have overpaid for Merrill Lynch. Shares of conglomerate GE fell as the company cut its dividend and lost its AAA credit rating, and so investors grew increasingly concerned about its finance segment. Other large absolute detractors included global financial services firm Citigroup.
What is the outlook?
It is increasingly clear that the U.S. is emerging from a deep recession. The rate of increase in unemployment has slowed, industrial production leading indicators are pointing to an expansion, and the housing market has shown some signs of stabilization. The government continues to reshape the financial playing field through stimulus packages, massive loans to impaired private sector companies, and other programs, all taken with an eye towards thawing credit markets and placing a floor on housing price declines and a ceiling on housing inventory. These moves will continue to help mitigate some of the current negative economic pressures, and while the outlook remains uncertain, the equity market’s improved performance since March lows shows investors are anticipating a recovery.
In this environment we continue to focus our efforts on stock-by-stock fundamental research. These bottom-up investment decisions have led to increases in exposure to Health Care, Consumer Discretionary, and Materials, all overweight positions versus the benchmark as of October 31, 2009. At the end of the period the Fund was most overweight to the Health Care, Materials, and Consumer Discretionary sectors and most underweight Consumer Staples, Industrials, and Utilities. The Fund’s largest absolute sector weights were in the Health Care, Information Technology, and Financials sectors.
Diversification by Industry
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 %
 
        

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Diversification by Country
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 %
 
        

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The Hartford Capital Appreciation Fund
Schedule of Investments
October 31, 2009
(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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Capital Appreciation Fund
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.
The accompanying notes are an integral part of these financial statements.

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  
The aggregate value of these securities at October 31, 2009 was $53,852 which represents 0.31% of total net assets.
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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.
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Capital Appreciation Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(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.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
                                                 
    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 $—.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Capital Appreciation Fund
Statement of Assets and Liabilities
October 31, 2009
(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  
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Capital Appreciation Fund
Statement of Operations
For the Year Ended October 31, 2009
(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  
 
      
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford Capital Appreciation Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Capital Appreciation Fund
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 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

 

The Hartford Capital Appreciation Fund
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

 

The Hartford Capital Appreciation Fund
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

 

The Hartford Capital Appreciation Fund
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

 

The Hartford Capital Appreciation Fund
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

 

The Hartford Capital Appreciation Fund
Financial Highlights
– 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
   $ 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

 

- 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)
 
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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
of The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Capital Appreciation Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Capital Appreciation Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

24

 

The Hartford Capital Appreciation Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford Capital Appreciation Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

27

 

The Hartford Capital Appreciation Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                         
                    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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

28

 

The Hartford Capital Appreciation Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)        
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Capital Appreciation Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Capital Appreciation Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non- management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

30

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the

31

 

The Hartford Capital Appreciation Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

32

 

The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

33

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD)
MFAR-5 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06115

 

(THE HARTFORD LOGO)            
(GRAPHIC)

 

 

The Hartford Capital Appreciation II Fund
Table of Contents
         
Manager Discussions (Unaudited)
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Financial Statements
        
 
        
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    32  

 

 

The Hartford Capital Appreciation II Fund inception 04/29/2005
(subadvised by Wellington Management Company, LLP)   Investment objective — Seeks growth of capital.
Performance Overview(1) 4/29/05 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(GRAPH)
Russell 3000 Index is an unmanaged index that measures the performance of the 3,000 largest U.S. companies based on total market capitalization. You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                 
    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
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 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    
How did the Fund perform?
The Class A shares of The Hartford Capital Appreciation II Fund returned 23.02%, before sales charge, for the twelve-month period ended October 31, 2009, outperforming its benchmark, the Russell 3000 Index, which returned 10.83% for the same period. The Fund also outperformed the 14.23% return of the average fund in the Lipper Multi-Cap Core Funds peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
Broad U.S. equity markets rose during the period, but this overall increase masks two significantly different market environments. From the beginning of November through early March stocks fell sharply, reflecting deepening economic worries and concerns over the U.S. government’s increasing involvement in the economy. From early March through the end of October stocks rallied as investors came to believe that a Depression-like scenario was less likely. Nine out of ten sectors in the Russell 3000 Index posted positive returns during the period. Strong performers included the Information Technology (+31%), Consumer Discretionary (+25%), and Materials (+21%) sectors. The Financials (-7%) was the only sector to post a negative return, while the Utilities (+3%) and Industrials (+4%) sectors lagged on a relative basis.

2

 

The Fund outperformed its benchmark primarily due to stock selection. Selection was positive in six of ten economic sectors, led by Financials, Energy, Health Care, and Materials. Selection detracted from relative (i.e. performance of the Fund as measured against the benchmark) returns in the Information Technology and Industrials sectors. Allocation among sectors, a result of the bottom-up (i.e. stock by stock fundamental research) stock selection process, also was additive, largely due to an overweight (i.e. the Fund’s sector position was greater than the benchmark position) position in Financials during the Financials rally in mid-March and an overweight position in Health Care during the first few months of the period.
The top contributors to relative and absolute (i.e. total return) returns were Schering-Plough (Health Care), Goldman Sachs (Financials), and Aecom Technology (Industrials). Schering-Plough, a global health care company, saw its shares rise on news of a definitive merger agreement with Merck. Shares of bank holding company Goldman Sachs moved higher as the firm’s relatively clean balance sheet and surge in underwriting activity attracted investors. Aecom Technology, a global provider of professional, technical, and management support services, reported strong earnings and backlog gains supported by solid growth across segments and geographies, pushing its shares higher.
Delta Air Lines (Industrials), Corinthian Colleges (Consumer Discretionary), and Marsh & McLennan (Financials) detracted most from relative returns. Despite recent gains, shares of airline operator Delta Air Lines ended the period lower, as the stock did not fully recover from a decline in high-fare business travel and investors’ concerns that demand destruction would overshadow the benefits of industry-wide capacity reductions. Corinthian Colleges, a post-secondary education services company with operations in the United States and Canada, saw its shares sink on concerns of the potential for greater government involvement in the industry and growth deceleration. Shares of Marsh & McLennan, a global provider of insurance, reinsurance brokering, and risk consulting services, came under pressure as the adverse global economic and financial environment negatively impacted earnings. General Electric (Industrials) was also among the largest detractors from absolute performance.
What is the outlook?
It is increasingly clear that the U.S. is emerging from a deep recession. The rate of increase in unemployment has slowed, industrial production leading indicators are pointing to an expansion, and the housing market has shown some signs of stabilization. The government continues to reshape the financial playing field through stimulus packages, massive loans to impaired private sector companies and other programs, all taken with an eye towards thawing credit markets and placing a floor on housing price declines and a ceiling on housing inventory. These moves should continue to help mitigate some of the current negative economic pressures, and while the outlook remains uncertain, the equity market’s improved performance since March lows shows investors are anticipating a recovery.
In this environment we continue to focus our efforts on stock-by-stock fundamental research across the Fund’s opportunistic and complementary investment strategies. These bottom-up investment decisions resulted in reductions to the Fund’s Health Care and Industrials exposure and increases in its exposure to Consumer Discretionary and Materials during the period. At the end of the period the Fund was most overweight in Consumer Discretionary, Materials, and Information Technology and most underweight (i.e. the Fund’s sector position was less than the benchmark position) to Consumer Staples, Energy, and Utilities.
Diversification by Industry
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

 

The Hartford Capital Appreciation II Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Capital Appreciation II Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Capital Appreciation II Fund
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  
     The aggregate value of these securities at October 31, 2009 was $2,240 which represents 0.22% of total net assets.
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Capital Appreciation II Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
                                                 
    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.
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Capital Appreciation II Fund
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford Capital Appreciation II Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Capital Appreciation II Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford Capital Appreciation II Fund
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 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

 

The Hartford Capital Appreciation II Fund
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

 

The Hartford Capital Appreciation II Fund
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  
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
   $ —     $ —     $ —     $ (206 )   $ —     $ (206 )
Equity contracts
     —       (29 )     —       —       —       (29 )
 
                                    
Total
   $ —     $ (29 )   $ —     $ (206 )   $ —     $ (235 )
 
                                    
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
     —       —       —       365       —     $ 365  
 
                                    
Total
   $ —     $ —     $ —     $ 365     $ —     $ 365  
 
                                    

17

 

The Hartford Capital Appreciation II Fund
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).
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:
         
    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

 

The Hartford Capital Appreciation II Fund
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

 

The Hartford Capital Appreciation II Fund
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

 

The Hartford Capital Appreciation II Fund
Financial Highlights
- 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
   $ 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

 

- 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 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Capital Appreciation II Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Capital Appreciation II Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(SIGNATURE)
Minneapolis, MN
December 15, 2009

26

 

The Hartford Capital Appreciation II Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford Capital Appreciation II Fund
Directors and Officers (Unaudited) – (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

29

 

The Hartford Capital Appreciation II Fund
Federal Tax Information (Unaudited)
The Fund made no capital gain or income distributions for the fiscal year ended October 31, 2009.

30

 

The Hartford Capital Appreciation II Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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  

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The Hartford Capital Appreciation II Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Capital Appreciation II Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

32

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets

33

 

The Hartford Capital Appreciation II Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

34

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
     
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
  (THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford Checks and Balances Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
Financial Statements
        
    4  
    5  
    6  
    7  
    8  
    9  
    16  
    18  
    19  
    21  
    21  
    22  
    23  
    24  

 

 

The Hartford Checks and Balances Fund inception 05/31/2007
(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.
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
Russell 3000 Index is an unmanaged index that measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                 
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1)   Growth of a $10,000 investment in Classes B, C, I, R3, R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these classes.
 
(2)   The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC.
 
(3)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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.
Portfolio Manager
Vernon J. Meyer, CFA
Senior Vice President
How did the Fund perform?
The Class A shares of The Hartford Checks and Balances Fund returned 17.34%, before sales charge, for the twelve-month period ended October 31, 2009, versus 16.15% for the Lipper Mixed-Asset Target Allocation Growth Funds average, 13.79% for the Barclays Capital U.S. Aggregate Bond Index, 9.78% for the S&P 500 Index, and 10.83% for the Russell 3000 Index.

2

 

Why did the Fund perform this way?
The Fund makes equal allocations of its assets to Class Y shares of the following Hartford Mutual Funds (“Underlying Funds”): The Hartford Capital Appreciation Fund, The Hartford Dividend and Growth Fund, and The Hartford Total Return Bond Fund. The Underlying Funds may invest in a wide variety of instruments which primarily include U.S. and foreign equity securities, fixed income and money market securities. The Fund is not actively managed, and the Fund’s assets will be rebalanced back to one-third each as soon as reasonably practicable whenever the Fund’s investment in any single Underlying Fund deviates from the target allocation by more than 5%.
The Fund’s relative performance benefited most from the performance of The Hartford Capital Appreciation Fund. The return of the Hartford Dividend and Growth Fund detracted most from relative performance.
What is the outlook?
The Fund will continue to make equal allocations of its assets to the three Underlying Funds. Please refer to the Hartford Mutual Fund website at www.hartfordinvestor.com for the shareholder report of each Underlying Fund.
Composition by Investments
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

 

The Hartford Checks and Balances Fund
Schedule of Investments
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Checks and Balances Fund
Investment Valuation Hierarchy Level Summary
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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Checks and Balances Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Checks and Balances Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Checks and Balances Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Checks and Balances Fund
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 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

 

The Hartford Checks and Balances Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Checks and Balances Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Checks and Balances Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Checks and Balances Fund
Financial Highlights
- 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
   $ 7.32     $ 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

 

- 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)
   
 
                                                
  17.34 %  
 
   $ 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Checks and Balances Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Checks and Balances Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Checks and Balances Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford Checks and Balances Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

21

 

The Hartford Checks and Balances Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Checks and Balances Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Checks and Balances Fund
Approval of Investment Management Agreement (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Checks and Balances Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO” or the “Adviser”) (the “Agreement”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Adviser to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreement at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Adviser, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreement.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreement with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreement for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreement was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreement. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreement is provided below.
Nature, Extent And Quality Of Services Provided by the Adviser
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Adviser. The Board considered, among other things, the terms of the Agreement and the range of services provided by the Adviser. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreement, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Adviser’s professional personnel who provide services to the Fund, including the Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered the Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of the Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning the Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on the Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on the Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Adviser’s support of the Fund’s compliance control structure, particularly the resources devoted by the Adviser in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreement, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment

24

 

advisory. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO.
Performance of the Fund and the Adviser
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Adviser concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Adviser’s cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Adviser
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Adviser and its affiliates from its relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Adviser
The Board considered comparative information with respect to the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO relating to the total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO. The Board noted Management’s proposal to increase the levels above which expenses will be reimbursed for each share class by 0.10%.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Adviser, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s total operating expenses.

25

 

The Hartford Checks and Balances Fund
Approval of Investment Management Agreement (Unaudited) — (continued)
Based on these considerations, the Board concluded that the Fund’s total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Adviser’s realization of economies of scale with respect to the Fund, and whether the expense levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the expense ratios for the Fund at its current and reasonably anticipated asset levels.
Other Benefits
The Board considered other benefits to the Adviser and its affiliates from its relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreement for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

26

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-6 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06115
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
The Hartford
(THE HARTFORD MUTUAL FUNDS LOGO)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Conservativ e Al ocation Fund

 

 

The Hartford Conservative Allocation Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    4  
 
    5  
 
    6  
 
    7  
 
    8  
 
    9  
 
    18  
 
    20  
 
    21  
 
    23  
 
    23  
 
    24  
 
    25  
 
    26  

 

 

The Hartford Conservative Allocation Fund inception 05/28/2004
(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
     (LINE GRAPH)
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
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index,Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns (2,3,4,5) (as of 10/31/09)
                         
    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
How did the Fund perform?
The Class A shares of The Hartford Conservative Allocation Fund returned 18.90%, before sales charges, 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 Allocation Conservative category, a group of funds with investment strategies similar to those of the Fund, was 15.42%.
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

 

During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Within fixed income, yields decreased during the year, with the ten-year Treasury note yield falling 57 basis points to 3.38% and the five-year Treasury note yield falling 52 basis points to 2.31%. Within the major sectors of the Barclays Capital U.S. Aggregate Index, Credit was the top performer, while Agency securities were the worst. High Yield asset classes such as U.S. high yield bonds, floating rate notes, and Emerging Market Debt significantly outperformed the Barclays Capital U.S. Aggregate Index. The Barclays Capital High Yield index, for example, posted strong results, up 48.1% over the period.
Generally, the Fund’s target asset allocation is set at approximately 40% equities and 60% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the fund’s performance. Specifically, favorable allocations within the international markets into emerging markets, international small-cap, and international real estate investment trusts (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The Fund’s strategic asset allocation decisions within fixed income detracted from performance. Although the Fund benefited from exposures to high yield asset classes, diversification within these high yield asset classes detracted from results. The Fund’s duration (i.e. sensitivity to changes in interest rates) was targeted to be less than the Barclays Capital U.S. Aggregate Index, a decision based on the risk preferences of the Fund. For the year, duration positioning detracted from performance.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it has behaved historically. Finally a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our underlying fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). A hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required in March 09 to restore the Fund allocations back to their targets.
During the period, the Fund has continued to utilize exchange traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Specifically, the Fund has set target allocations to ETFs that provide U.S. real estate, international real estate, and emerging market debt exposure.
What is the Outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters. We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2%-3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there is no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months–3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
We have positioned the Fund with an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to international equities, both large and small cap, while reducing our high yield and floating rate note exposure to a more neutral weight as they are approaching fair value on the back of improved fundamentals. In addition, we have reversed the underweight in inflation protected securities. Lastly, the fund increased its exposure to REITs, recognizing the inflationary benefits of the asset class.
Composition by Investments
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

 

The Hartford Conservative Allocation Fund
Schedule of Investments
October 31, 2009
(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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Conservative Allocation Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Conservative Allocation Fund
Statement of Assets and Liabilities
October 31, 2009
(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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Conservative Allocation Fund
Statement of Operations
For the Year Ended October 31, 2009
(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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Conservative Allocation Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Conservative Allocation Fund
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 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

 

The Hartford Conservative Allocation Fund
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 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

 

The Hartford Conservative Allocation Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Conservative Allocation Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Conservative Allocation Fund
Notes to Financial Statements — (continued)
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

 

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17

 

The Hartford Conservative Allocation Fund
Financial Highlights
— 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
   $ 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

 

— 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)
 
                                                
    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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Conservative Allocation Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Conservative Allocation Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

20

 

The Hartford Conservative Allocation Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford Conservative Allocation Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

23

 

The Hartford Conservative Allocation Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

24

 

The Hartford Conservative Allocation Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Conservative Allocation Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Conservative Allocation Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

26

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In

27

 

The Hartford Conservative Allocation Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

28

 

The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

29

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-7  12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford Disciplined Equity Fund
Table of Contents
         
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
(LINE GRAPH)
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns (2,3,4,5) (as of 10/31/09)
                         
    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.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1)   Growth of a $10,000 investment in Classes B, C, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   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
How did the Fund perform?
The Class A shares of The Hartford Disciplined Equity Fund returned 12.82%, before sales charge, for the twelve-month period ended October 31, 2009, outperforming its benchmark, the S&P 500 Index, which returned 9.78% for the same period. The Fund also outperformed the 10.71% return of the average fund in the Lipper Large-Cap Core Funds peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
The period was marked by two distinct episodes. The first was a freefall of global equity markets from October through March. This was characterized by uncertainty over the U.S. government stimulus package, tight global credit and liquidity conditions, a collapse of global industrial production, and sharp increases in unemployment. Beginning in March, global equity markets rallied sharply as investors showed increased appetite for risk and reacted positively to nascent signs of a bottoming in the fortunes of the financial industry, coupled with aggressive intervention by the Federal Reserve (Fed) in the capital markets, and better-than-expected corporate profits due to cost cutting. Signs of economic stabilization overshadowed concerns about high unemployment and weak home prices.

2

 

Strength was widespread during the period as nine of the ten broad economic sectors in the S&P 500 Index rose. Information Technology (+32%), Consumer Discretionary (+21%) and Materials (+16%) performed relatively well during the period. Financials (–8%), Utilities (+2%), and Industrials (+3%) fared less well.
The Fund’s relative (i.e. performance of the Fund as measured against the benchmark) outperformance was due largely to strong stock selection within Financials, Energy, Materials, and Health Care. Our below-benchmark allocation to Financials and overweight (i.e. the Fund’s sector position was greater than the benchmark position) to Information Technology also contributed to the Fund’s relative outperformance.
The largest contributors to relative performance were Bank of America (Financials), Wells Fargo (Financials), and Gap (Consumer Discretionary). Not owning benchmark component Bank of America (Financials) for the first half of the period helped performance versus the benchmark as the stock price fell over concerns that it required substantially more capital to support its acquisitions of troubled Merrill Lynch and Countrywide. We purchased the stock when it became clear that the company’s prospects were better than the market feared and thus benefited from the stock’s subsequent rise in price. In a difficult period for Financial Services stocks, shares of U.S. bank Wells Fargo fell less than those of many other U.S. banks as the company benefited from industry consolidation and a “flight to quality.” Shares of U.S. specialty-retailer Gap rose due to better-than-expected sales and management’s focus on increasing profits. Our position in Apple (Information Technology) was among our top absolute (i.e. total return) contributors to performance.
The largest detractors to performance relative to the benchmark were Apollo Group (Consumer Discretionary), PNC Financial Services (Financials), and Exelon (Utilities). For-profit education provider Apollo Group, which operates the University of Phoenix among other institutions, saw share price weakness in the latter part of the period due to criticisms of the company’s academic quality, assessment, recruiting, and financial aid procedures. We did not own the stock for much of the first half of the period when the share price rose, which detracted from the Fund’s performance. PNC, a banking, asset management, and funds processing services company, saw its share price decline along with the rest of the Financials sector due to a loss of confidence in the U.S. financial system. Shares of the largest nuclear power generator in the U.S., Exelon, declined as the company reported disappointing revenues and below-consensus guidance citing weak electricity demand. Other detractors from absolute performance included General Mills (Consumer Staples) and Southwest Airlines (Industrials).
What is the outlook?
It is increasingly clear that the U.S. is emerging from a deep recession. The rate of increase in unemployment has slowed, industrial production leading indicators are pointing to an expansion, and the housing market has shown some signs of stabilization. The government continues to reshape the financial playing field through stimulus packages, massive loans to impaired private sector companies, and other programs, all taken with an eye towards thawing the credit markets and placing a floor on housing price declines and a ceiling on housing inventory.
The Fund focuses on stock selection as the key driver of returns and uses proprietary fundamental and quantitative research in a disciplined framework to build a portfolio of the most attractive stocks. Sector exposures are residuals from this bottom-up (i.e. stock by stock fundamental research) stock selection process and are not explicit management decisions. Based on individual stock decisions, the Fund ended the period most overweight the Health Care, Information Technology, and Financials sectors and most underweight (i.e. the Fund’s sector position was less than the benchmark position) Consumer Staples, Industrials, and Materials relative to the Fund’s benchmark.
Diversification by Industry
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

 

The Hartford Disciplined Equity Fund
Schedule of Investments
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  
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Disciplined Equity Fund
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.
Futures Contracts Outstanding at October 31, 2009
                         
                    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.
Cash of $50 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.
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Disciplined Equity Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Disciplined Equity Fund
Statement of Assets and Liabilities
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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Disciplined Equity Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Disciplined Equity Fund
Statement of Changes in Net Assets
(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  
 
            
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford Disciplined Equity Fund
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 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

 

The Hartford Disciplined Equity Fund
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

 

The Hartford Disciplined Equity Fund
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

 

The Hartford Disciplined Equity Fund
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

 

The Hartford Disciplined Equity Fund
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

 

The Hartford Disciplined Equity Fund
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

 

The Hartford Disciplined Equity Fund
Financial Highlights
— 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
   $ 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

 

— 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)            
                                                       
 
        
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Disciplined Equity Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Disciplined Equity Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

24

 

The Hartford Disciplined Equity Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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

 

The Hartford Disciplined Equity Fund
Directors and Officers (Unaudited) — (continued)
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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.
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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

 

Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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.
Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

27

 

The Hartford Disciplined Equity Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

28

 

The Hartford Disciplined Equity Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Disciplined Equity Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Disciplined Equity Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

30

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and

31

 

The Hartford Disciplined Equity Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

32

 

The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

33

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-8 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
(IMAGE)

 

 

The Hartford Diversified International Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    5  
 
    13  
 
    14  
 
    15  
 
    16  
 
    17  
 
    28  
 
    30  
 
    31  
 
    33  
 
    33  
 
    34  
 
    35  
 
    36  

 

 

The Hartford Diversified International Fund inception 06/30/2008
     
(subadvised by Wellington Management Company, LLP)   Investment objective — Seeks long-term capital appreciation.
Performance Overview(1) 6/30/08 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(PERFORMANCE GRAPH)
MSCI All Country World ex U.S. Index is a broad based, unmanaged, market capitalization weighted, total return index that measures the performance of both developed and emerging stock markets, excluding the U.S. The index is calculated to exclude companies and share classes which cannot be freely purchased by foreigners.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                 
    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
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)   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    
How did the Fund perform?
The Class A shares of The Hartford Diversified International Fund returned 25.40%, before sales charge, for the twelve-month period ended October 31, 2009, underperforming its benchmark, the MSCI All Country World ex U.S. Index, which returned 34.79% for the same period. The Fund also underperformed the 28.52% return of the average fund in the Lipper International Multi-Cap Core peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
The positive return of the benchmark during the period masks two significantly different market environments. From the beginning of November through early March stocks fell sharply, reflecting deepening economic worries and concerns over the impact of various governments’ increasing involvement in the global economy. From early March through the end of October stocks rallied as investors came to believe that a Depression-like scenario was less likely as better-than-expected corporate earnings and generally improving economic data boosted investors’ enthusiasm for stocks. All ten sectors within the MSCI All Country World

2

 

ex U.S. posted double digit returns for the period. The Materials (+60%), Financials (+40%), and Industrials (+40%) sectors posted the largest gains while the Utilities (+10%), Health Care (+15%), and Telecommunication Services (+28%) lagged on a relative basis.
The Fund’s underperformance versus the benchmark was due to weak stock selection. Selection was weakest within Financials, Materials, and Consumer Staples. This was partially offset by stronger selection in Consumer Discretionary and Energy. Sector positioning, which is a result of individual stock decisions, also detracted from benchmark-relative (i.e. performance of the Fund as measured against the benchmark) returns, largely due to an underweight (i.e. the Fund’s sector position was less than the benchmark position) position in Materials and an overweight (i.e. the Fund’s sector position was greater than the benchmark position) position in Health Care. The Fund also benefited from a modest cash position, which helped relative performance as the market trended lower from November through February.
The largest detractors from relative returns were Nintendo (Information Technology), Japan Tobacco (Consumer Staples), and Vimpel-Communications (Telecommunication Services). Japanese video game console company Nintendo saw its shares fall due to weak Wii game console and software sales trends. Shares of cigarette and tobacco products company Japan Tobacco were pressured due to investor fears that the Japanese government would raise taxes on tobacco and poor performance in weak economic regions like Russia. Russian wireless operator Vimpel-Communications saw its shares fall amid significant macroeconomic uncertainty in Russia and weakness in the ruble relative to the U.S. dollar. Belgium-based financial services company KBC Groep (Financials) was also among the top detractors from absolute (i.e. total return) returns.
Top contributors to relative performance during the period included Volkswagen (Consumer Discretionary), Standard Chartered (Financials), and Hon Hai Precision (Information Technology). German car maker Volkswagen’s shares slid during the period, following sharp gyrations in the company’s stock driven by Porsche’s move to take a controlling stake in the company and the company’s announcement of lower-than-expected fiscal year 2009 guidance. The Fund benefited on a relative basis by not holding the stock, which is included in the benchmark. Shares of U.K.-based bank Standard Chartered rose due to strong wholesale banking revenues and a solid balance sheet as well as investors’ confidence in its competitive position. Hon Hai Precision, a Taiwan-based electronics company, saw its shares rise as the company posted higher-than-expected earnings mainly due to improved cost efficiencies. Top absolute contributors to performance included diversified mining company Rio Tinto (Materials) and Brazil-based bank Itau Unibanco Holdings (Financials).
What is the outlook?
Global economies continued the healing process during the latter part of the period. The Fund’s overall positioning is consistent with an improving economic outlook as aggressive stimulus measures have proven effective at providing liquidity and have eased financial market pressures.
The Fund comprises multiple specialized portfolios, each of which is run independently from the others. Collectively these strategies offer a diverse set of exposures to non-U.S. stocks across industries, regions, and market caps. Due to these bottom-up (i.e. stock by stock fundamental research) investment decisions the Fund ended the period most overweight the Consumer Discretionary, Industrials, and Health Care sectors and most underweight the Financials, Energy, and Telecommunication Services sectors.
Diversification by Industry
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

 

Diversification by Country
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

 

The Hartford Diversified International Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Diversified International Fund
Schedule of Investments — (continued)
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Diversified International Fund
Schedule of Investments — (continued)
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Diversified International Fund
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  
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Diversified International Fund
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  
The aggregate value of these securities at October 31, 2009 was $— which represents —% of total net assets.
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                             
                        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.
Currency Concentration on Securities at October 31, 2009
         
    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 %
 
      
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford Diversified International Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(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.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
                                         
    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).
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford Diversified International Fund
Statement of Assets and Liabilities
October 31, 2009
(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  
 
      
The accompanying notes are an integral part of these financial statements.

14

 

The Hartford Diversified International Fund
Statement of Operations
For the Year Ended October 31, 2009
(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  
 
      
The accompanying notes are an integral part of these financial statements.

15

 

The Hartford Diversified International Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
            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.
The accompanying notes are an integral part of these financial statements.

16

 

The Hartford Diversified International Fund
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 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

 

The Hartford Diversified International Fund
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

 

The Hartford Diversified International Fund
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.
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

21

 

The Hartford Diversified International Fund
Notes to Financial Statements — (continued)
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.
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

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

 

The Hartford Diversified International Fund
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 $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:
As of October 31, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows:
         
    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

 

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
   $ 27,565  
Sales Proceeds Excluding U.S. Government Obligations
     21,236  
7. Capital Share Transactions:
The following information is for the year ended October 31, 2009 and the period June 30, 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
     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  
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.

25

 

The Hartford Diversified International Fund
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.

26

 

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27

 

The Hartford Diversified International Fund
Financial Highlights
- 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
   $ 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

 

- 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)
 
                                                  
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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Diversified International Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Diversified International Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
-s- ERNST & YOUNG LLP                    
Minneapolis, MN
December 15, 2009

30

 

The Hartford Diversified International Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Diversified International Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

33

 

The Hartford Diversified International Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
The Fund intends to make an election under the Internal Revenue Code Section 853 to pass-through foreign taxes paid by the Fund to their shareholders in the amount of $37.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

34

 

The Hartford Diversified International Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Diversified International Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Diversified International Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

36

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over

37

 

The Hartford Diversified International Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

38

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-9 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
(IMAGE)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Dividend and Growth Fund

 

 

The Hartford Dividend and Growth Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    4  
 
    7  
 
    8  
 
    9  
 
    10  
 
    11  
 
    22  
 
    24  
 
    25  
 
    27  
 
    27  
 
    28  
 
    29  
 
    30  

 

 

The Hartford Dividend and Growth Fund inception 07/22/1996
     
(subadvised by Wellington Management Company, LLP)
  Investment objective — Seeks a high level of current income
consistent with 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
(PERFORMANCE GRAPH)
Russell 1000 Value Index is an unmanaged index measuring the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
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 Manager
Edward P. Bousa, CFA
Senior Vice President, Partner
How did the Fund perform?
The Class A shares of The Hartford Dividend and Growth Fund returned 12.17%, before sales charge, for the twelve-month period ended October 31, 2009, outperforming its benchmark, the S&P 500 Index, which returned 9.78% for the same period. The Fund also outperformed the 9.72% return of the average fund in the Lipper Equity Income Funds peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
Broad U.S. equity markets rose during the period, but this overall increase masks two significantly different market environments. From the beginning of November through early March stocks fell sharply, reflecting deepening economic worries and concerns over the U.S. government’s increasing involvement in the economy. From early March through the end of October stocks rallied as investors came to believe that a Depression-like scenario was less likely.

2

 

Overall equity market performance was positive for the period across all market capitalizations: large cap equities (+10%), mid caps (+18%), and small caps (+6%) all rose, as represented by the S&P 500, S&P 400 MidCap, and Russell 2000 indices respectively. During the twelve-month period nine of ten sectors within the S&P 500 Index posted positive returns, led by Consumer Discretionary (+21%), Information Technology (+32%), and Materials (+16%). Financials (-8%), Utilities (+2%), and Industrials (+3%) lagged on a relative basis.
The Fund’s outperformance relative (i.e. performance of the Fund as measured against the benchmark) to the S&P 500 Index was due to strong stock selection, particularly in Health Care, Energy, and Financials, which more than offset weak stock selection in the Information Technology, Consumer Discretionary, and Telecommunication Services sectors. Sector allocation detracted from benchmark-relative results, specifically the Fund’s underweight (i.e. the Fund’s sector position was less than the benchmark position) allocations to the strong-performing Information Technology and Consumer Discretionary sectors.
The Fund’s top contributors to benchmark-relative performance during the period were Schering-Plough (Health Care), Anadarko Petroleum (Energy), and Wells Fargo (Financials). Pharmaceutical company Schering-Plough benefited from a takeover offer from Merck, driving its share price higher. Shares of oil and gas exploration and production company Anadarko Petroleum rose due to multiple oil discoveries in the company’s high profile exploration portfolio. Shares of U.S. bank Wells Fargo rose after a capital raise helped to secure the company’s financial position. IBM (Information Technology) was also a top contributor to absolute (i.e. total return) performance.
Top detractors from benchmark-relative performance included Apple (Information Technology), Bank of America (Financials), and Capital One (Financials). Not holding consumer electronics company Apple hurt benchmark-relative performance as the stock performed well during the period despite slowing consumer trends. Shares of diversified banking company Bank of America fell significantly on weakness in their consumer-oriented loan portfolio and difficulties surrounding their acquisition of Merrill Lynch. Capital One, a diversified banking company with credit card, automobile, and commercial lending operations, announced disappointing quarterly results and forecast higher credit losses in 2009. Leading U.S. conglomerate General Electric (Industrials) was also a top detractor from absolute performance.
What is the outlook?
The market’s sharp rally off its March lows has narrowed or eliminated many previously-attractive disparities between market price and our assessment of fair value. The strength of the rally suggests that investors are pricing in not just the removal of the worst-case scenario, but a robust economic recovery. While recent economic releases point to an improvement from the dire outlook of early 2009, the U.S. economy is by no means out of the woods. Consumer and corporate debt levels remain high, unemployment persists near 10%, and the government’s unprecedented monetary and fiscal stimulus has raised the specter of inflation down the road.
Our investment discipline is focused on investing in areas of strong demand and avoiding areas of oversupply. At the end of the period, our largest overweights (i.e. the Fund’s sector position was greater than the benchmark position) were to the Energy, Industrials, and Health Care sectors, while we remain underweight to the Information Technology, Consumer Discretionary, and Consumer Staples sectors. We believe the Energy sector remains attractive based upon restricted supply at lower prices and a possible global economic rebound. Health Care also remains an attractive sector, due to both valuation and expected innovation, despite concerns regarding government reform.
Diversification by Industry
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

 

The Hartford Dividend and Growth Fund
Schedule of Investments
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Dividend and Growth Fund
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.
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Dividend and Growth Fund
Investment Valuation Hierarchy Level Summary
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.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
                                 
    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).
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Dividend and Growth Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Dividend and Growth Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Dividend and Growth Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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.
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford Dividend and Growth Fund
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 Dividend and 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

11

 

The Hartford Dividend and Growth Fund
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.
 
      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

 

The Hartford Dividend and Growth Fund
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.
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
   $ 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

 

The Hartford Dividend and Growth Fund
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.
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.

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

 

The Hartford Dividend and Growth Fund
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  
5. Affiliate Holdings:
As of October 31, 2009, The Hartford Checks and Balances Fund, an affiliated fund, had ownership of 30,911 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
   $ 2,177,489  
Sales Proceeds Excluding U.S. Government Obligations
     1,326,063  

19

 

The Hartford Dividend and Growth Fund
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
     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  
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
     952     $ 13,512  
For the Year Ended October 31, 2008
     654     $ 12,822  
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. Fund Merger
Reorganization of certain series of Hartford Mutual Funds, Inc. On May 6, 2009, the Board of Directors (“Board”) of the Company approved a Form of Agreement and Plan of Reorganization (“Reorganization Agreement”) that provides for the reorganization of a series of the Company, The Hartford Stock Fund, into the Fund (“Reorganization”). The Reorganization did not require shareholder approval by shareholders of The Hartford Stock Fund.

20

 

Under the terms of the Plan of Reorganization, The Hartford Stock Fund (“Target Fund”) assets were acquired by the Fund (“Acquiring Fund”) on October 2, 2009. The Fund acquired the assets of The Hartford Stock Fund in exchange for shares in the Fund, which were distributed pro rata to The Hartford Stock Fund shareholders on October 2, 2009, in complete liquidation of The Hartford Stock Fund.
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
   $ 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  
The Hartford Stock Fund had the following unrealized appreciation (depreciation), accumulated net realized gains (losses) and capital stock as of October 2, 2009.
                         
    Unrealized Appreciation   Accumulated Net    
Fund   (Depreciation)   Realized Gains (Losses)   Capital Stock
Target Fund
   $ 11,295     $ (441,651 )   $ 854,703  
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

 

The Hartford Dividend and Growth Fund
Financial Highlights
- 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
   $ 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

 

- 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)
                                                         
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
of The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Dividend and Growth Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Dividend and Growth Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

24

 

The Hartford Dividend and Growth Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Dividend and Growth Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

27

 

The Hartford Dividend and Growth Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

28

 

The Hartford Dividend and Growth Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Dividend and Growth Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Dividend and Growth Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

30

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the

31

 

The Hartford Dividend and Growth Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.

32

 

The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

33

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-10 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL LOGO)

 

 

The Hartford Equity Growth Allocation Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
Financial Statements
        
    4  
    5  
    6  
    7  
    8  
    9  
    16  
    18  
    19  
    21  
    21  
    22  
    23  
    24  

 

 

The Hartford Equity Growth Allocation Fund inception 05/28/2004
(subadvised by Hartford Investment Management Company)
Investment objective — Seeks 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
(LINE GRAPH)
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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
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
How did the Fund perform?
The Class A shares of The Hartford Equity Growth Allocation Fund returned 15.20%, before sales charges, for the twelve-month period ended October 31, 2009. In comparison, its benchmark, the S&P 500 Index, returned 9.78% while the average return for the Lipper Multi-Cap Core category, a group of funds with investment strategies similar to those of the Fund, was 14.23%.
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.
During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors

2

 

preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
The Fund’s strategic asset allocation decisions within equities contributed to the fund’s performance. Specifically, favorable allocations within the international markets into emerging markets, international small-cap, and international real estate investment trust (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it has behaved historically. Finally, a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our underlying fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). No hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required for the reporting period.
During the period, the Fund has continued to utilize ETFs to obtain asset class exposures unavailable through The Hartford fund family. Specifically, the Fund has set target allocations to ETFs that provide U.S. and international real estate exposure.
What is the Outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters. We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
We have positioned the Fund with an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to international equities, both large and small cap.
Composition by Investments
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

 

The Hartford Equity Growth Allocation Fund
Schedule of Investments
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Equity Growth Allocation Fund
Investment Valuation Hierarchy Level Summary
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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Equity Growth Allocation Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Equity Growth Allocation Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Equity Growth Allocation Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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     $ —  
 
            
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Equity Growth Allocation Fund
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 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

 

The Hartford Equity Growth Allocation Fund
Notes to Financial Statements
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.
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

 

The Hartford Equity Growth Allocation Fund
Notes to Financial Statements
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).
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 *
    (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

 

The Hartford Equity Growth Allocation Fund
Notes to Financial Statements
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  
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
    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

 

The Hartford Equity Growth Allocation Fund
Financial Highlights
- 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
   $ 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

 

- 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)
 
                                                
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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Equity Growth Allocation Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Equity Growth Allocation Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(SIGNATURE)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Equity Growth Allocation Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Equity Growth Allocation Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

21

 

The Hartford Equity Growth Allocation Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Equity Growth Allocation Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Equity Growth Allocation Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Equity Growth Allocation Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant

24

 

monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In

25

 

The Hartford Equity Growth Allocation Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

26

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-11 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(HARTFORD LOGO)
(HARTFORD LOGO)

 

 

The Hartford Equity Income Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
Financial Statements
        
    4  
    6  
    7  
    8  
    9  
    10  
    20  
    22  
    23  
    25  
    25  
    26  
    27  
    28  

 

 

The Hartford Equity Income Fund inception 08/28/2003
(subadvised by Wellington Management Company, LLP)
Investment objective – Seeks a high level of current income consistent with
growth of capital.
Performance Overview(1) 8/28/03 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Russell 1000 Value Index is an unmanaged index measuring the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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
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
        
Karen H. Grimes, CFA
  Ian R. Link, CFA   W. Michael Reckmeyer, III, CFA
Senior Vice President
  Vice President   Senior Vice President
How did the Fund perform?
The Class A shares of The Hartford Equity Income Fund returned 6.62%, before sales charge, for the twelve-month period ended October 31, 2009, outperforming its benchmark, the Russell 1000 Value Index, which returned 4.78% for the same period. The Fund underperformed the 9.72% return of the average fund in the Lipper Equity Income Funds peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
Broad U.S. equity markets rose during the period, but this overall increase masks two significantly different market environments. From the beginning of November through early March 2009, stocks fell sharply reflecting deepening economic worries and concerns over the U.S. government’s increasing involvement in the economy. From early March through the end of October 2009, stocks rallied as investors came to believe that a Depression-like scenario was less likely. Sector returns within the Russell 1000 Value Index diverged widely in this environment, with strength in Information Technology (+33%), Consumer Discretionary (+23%), and Materials (+18%) overshadowing weakness in Financials (-8%) and Industrials (-5%).

2

 

The Fund outperformed its benchmark due to stock selection as well as allocation among sectors, a fall-out of the bottom-up (i.e. stock by stock fundamental research) stock selection process. Selection was particularly strong within the Industrials, Energy, and Consumer Staples sectors. In addition, an underweight (i.e. the Fund’s sector position was less than the benchmark position) position in Financials and an overweight (i.e. the Fund’s sector position was greater than the benchmark position) position in Information Technology helped relative (i.e. performance of the Fund as measured against the benchmark) performance.
Among the top contributors to benchmark-relative returns were Citigroup (Financials), Microsoft (Information Technology), and Nordstrom (Consumer Discretionary). We did not own the downward-trending shares of Citigroup during the period, which benefited relative results as the company is a significant benchmark holding. Shares of global technology giant Microsoft gained on better-than-expected quarterly results, expectations of a strong software product cycle, and cost cutting discpline. Nordstrom, an upscale retailer, saw its shares rise as its fundamentals improved and investors’ economic outlook became less negative. Top absolute (i.e. total return) contributors for the period included banking firm Goldman Sachs (Financials) and global pharmaceutical company Merck (Health Care).
PNC Financial (Financials), Bank of America (Financials), and U.S. Bancorp (Financials), detracted most from relative returns. Shares of financial services firm PNC Financial fell on concerns regarding the value of assets held at recently-acquired National City. Shares of Bank of America declined on weakness in their consumer-oriented loan portfolio and due to difficulties surrounding their acquisition of Merrill Lynch. A mixed earnings report and fears of a dividend cut pushed shares of banking and financial services company U.S. Bancorp lower. Stocks that detracted most from absolute returns included leading U.S. conglomerate General Electric (Industrials).
What is the outlook?
The market’s sharp rally off its March lows has narrowed or eliminated many previously-attractive disparities between market price and our assessment of fair value. The strength of the rally suggests that investors are pricing in not just the removal of the worst-case scenario, but a robust economic recovery. While recent economic releases point to an improvement from the dire outlook of early 2009, the U.S. economy is by no means out of the woods. Consumer and corporate debt levels remain high, unemployment persists near 10%, and the government’s unprecedented monetary and fiscal stimulus has raised the specter of inflation down the road.
In this environment we continue to apply our time-tested philosophy focused on building a portfolio in which growth and the dividend yield are better than the market and valuations are lower than the market. Based on bottom-up stock decisions, we ended the period most overweight the Consumer Staples, Industrials, and Information Technology sectors; our largest underweights were in the Financials, Telecommunications Services, and Energy sectors.
Diversification by Industry
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

 

The Hartford Equity Income Fund
Schedule of Investments
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  
The accompanying notes are an integral part of these financial statements.

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

 

The Hartford Equity Income Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Equity Income Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Equity Income Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Equity Income Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Equity Income Fund
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 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

 

The Hartford Equity Income Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Equity Income Fund
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
   $ 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

 

The Hartford Equity Income Fund
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
    1.24 %     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

 

The Hartford Equity Income Fund
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
     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

 

The Hartford Equity Income Fund
Financial Highlights
                                                                                         
- 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Equity Income Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Equity Income Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(LOGO)
Minneapolis, MN
December 15, 2009

22

 

The Hartford Equity Income Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford Equity Income Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

25

 

The Hartford Equity Income Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

26

 

The Hartford Equity Income Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Equity Income Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Equity Income Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.

28

 

With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.

29

 

The Hartford Equity Income Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

30

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-12 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(LOGO)

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford Floating Rate Fund
Table of Contents
         
Manager Discussions (Unaudited)
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Financial Satements
        
 
        
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The Hartford Floating Rate Fund inception 04/29/2005
(subadvised by Hartford Investment Management Company)
  Investment objective — Seeks a high level of current income.
Performance Overview(1) 4/29/05 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Credit Suisse Leveraged Loan Index is designed to mirror the investable universe of the U.S.dollar-denominated leveraged loan market.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                 
    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
How did the Fund perform?
The Class A shares of The Hartford Floating Rate Fund returned 23.65%, before sales charge, for the twelve-month period ended October 31, 2009. In comparison, its benchmark, the Credit Suisse Leveraged Loan Index, returned 24.65%, while the average return of the Lipper Loan Participation Funds category, a group of funds with investment strategies similar to those of the Fund, was 23.90%.
Why did the Fund perform this way?
The last twelve-months (for the period ended October 31, 2009) in the leveraged loan market was easily the most volatile period on record. Following the failure of Lehman Brothers in September of 2008, the loan market and credit markets in general collapsed. The loan market (as represented by Credit Suisse Leveraged Loan Index) returned -28.75% for calendar year 2008, with most of the decline coming in the final three months of the year. In the face of continued uncertainty, the Fund’s cash allocation was increased to near 15% going into 2009.
However, 2009 brought changes for the better. The high yield bond and loan markets began 2009 with a rally that has continued for nearly the entire year, mostly driven by retail inflows in both asset classes. Specific to loans, scheduled amortization payments and cash proceeds from repayments resulted in increased demand as investors redeployed the cash back into the loan market. With no material new issuance in the market, and the absence of forced selling the technical picture shifted to the investors’ favor. This has resulted in the loan market posting a 40.7% year to date return as of October 31, 2009.

2

 

Over the last twelve-months, the Fund modestly underperformed its benchmark. As previously mentioned, the Fund had a sizable allocation to cash going into 2009, and, this was a significant drag on relative (i.e. performance of the Fund as measured against the benchmark) performance as the markets began to rally. The Fund also had a significant underweight (i.e. the Fund’s sector position was less than the benchmark position) to the Auto sector, which outperformed the loan market as a whole.
The Fund’s cash allocation was steadily reduced starting in March, however since liquidity concerns still plagued the overall market and the loan market specifically, the Fund added allocations to high yield bonds and investment grade bonds in lieu of continuing to hold a high allocation to cash. The purchases in these sectors were confined to quality, short-dated bonds where we expect repayment and refinancing should not be a problem. These positions did temper total returns since loans rallied more in 2009 than either of these asset classes. However, the allocations have improved the liquidity profile of the Fund as well as contributed to the Fund’s yield in a historically low LIBOR (London Interbank Offering Rate) environment.
Beginning in April 2009 as the overall market continued to show signs of improvement; the Fund started reducing exposure to traditionally defensive sectors such as Healthcare, Utilities, and Food, while increasing exposure to cyclical sectors including Chemicals, Housing, Forest Products, and Retail. These allocation shifts helped bolster performance over the last half of the period.
What is your outlook?
Signs continue to point to an economic recovery in the U.S., and we believe the worst is behind us. The number of issuers seeking amendment relief is slowing, and the ability to amend loans should continue to benefit the loan market as issuers are able to push off impending maturity dates.
Our longer-term (twelve-month) outlook is that the bank loan market will continue to generate positive returns, which we feel will be equally attributable to coupon and price appreciation. In addition, the potential for a rising rate environment continues to increase, which would benefit the yield generated by the bank loan asset class. With much of the loan markets easy returns behind us, future performance will once again be largely driven by credit selection. We still expect defaults to end the year around 10-12%, but we have revised our expectation for the next twelve months to 6-8%, and we think even that may be slightly conservative.
Distribution by Credit Quality
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 %
 
        
Diversification by Industry
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

 

The Hartford Floating Rate Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Floating Rate Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
       
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Floating Rate Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Floating Rate Fund
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Floating Rate Fund
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.
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford Floating Rate Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
                                         
            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.
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford Floating Rate Fund
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

14

 

The Hartford Floating Rate Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

15

 

The Hartford Floating Rate Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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

 

The Hartford Floating Rate Fund
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 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

 

The Hartford Floating Rate Fund
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

 

The Hartford Floating Rate Fund
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

 

The Hartford Floating Rate Fund
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

 

The Hartford Floating Rate Fund
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

 

The Hartford Floating Rate Fund
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

 

The Hartford Floating Rate Fund
Financial Highlights
- 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
   $ 7.13     $ 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

 

- 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)
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Floating Rate Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian, agent banks and brokers or by other appropriate auditing procedures where replies from agent banks or brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Floating Rate Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)               
Minneapolis, MN
December 15, 2009

30

 

The Hartford Floating Rate Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Floating Rate Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

33

 

The Hartford Floating Rate Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

34

 

The Hartford Floating Rate Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Floating Rate Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Floating Rate Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

36

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets

37

 

The Hartford Floating Rate Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

38

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-13 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
(IMAGE)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Fundamental Growth Fund

 

 

The Hartford Fundamental Growth Fund
Table of Contents
         
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 		   
(PERFORMANCE GRAPH)
Russell 1000 Growth Index is an unmanaged index which measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                         
    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.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
 
(1)   Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC.
 
(3)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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 Manager
Francis J. Boggan, CFA
Senior Vice President, Partner
How did the Fund perform?
The Class A shares of The Hartford Fundamental Growth Fund returned 19.95%, before sales charge, for the twelve-month period ended October 31, 2009, outperforming its benchmark, the Russell 1000 Growth Index, which returned 17.51% for the same period. The Fund also outperformed the 15.35% return of the average fund in the Lipper Large-Cap Growth Funds peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
After posting steep losses in 2008 and the first part of 2009 amid increasing signs of a deeper and more protracted recession, U.S. equities staged a sharp rebound beginning in March as favorable news from a few large financial institutions signaled to investors that the troubled Financials sector might be starting to stabilize. Adding fuel to the recovery was the U.S. Treasury Department’s updated plan to clean up bank balance sheets.
In this environment, mid-cap stocks (+18%) outperformed small (+6%) and large cap stocks (+10%), as measured by the S&P MidCap 400, Russell 2000 and S&P 500 indexes, respectively. Growth stocks (+18%) significantly outperformed Value stocks (+5%), as measured by the Russell 1000 Growth and Russell 1000 Value Indexes, respectively. Within the Russell 1000 Growth Index, all ten of the broad economic sectors posted positive returns. Information Technology (+31%) and Consumer Discretionary (+25%) had the strongest returns while Health Care (+7%) and Utilities (+8%) lagged the most.

2

 

The Fund outperformed the benchmark during the period due to positive sector allocation, a result of bottom-up (i.e. stock by stock fundamental research) stock selection, and stock selection within several sectors. Overweight (i.e. the Fund’s sector position was greater than the benchmark position) allocations to Information Technology, Health Care, and Telecommunication Services positively contributed to relative (i.e. performance of the Fund as measured against the benchmark) returns. Stock selection was strongest in Energy, Industrials, and Financials.
Top contributors to relative and absolute (i.e. total return) performance included Flowserve (Industrials), Alliance Data Systems (Information Technology), and Nordstrom (Consumer Discretionary). Shares of Flowserve, a manufacturer of flow control systems for the power, oil & gas, and chemical industries, rallied as the company began to receive an increase in orders from large customers. Integrated marketing, transaction processing, and credit services provider Alliance Data Systems benefitted from increased confidence that consumer spending is stabilizing. Luxury retailer Nordstrom’s shares rebounded as its fundamentals improved and investors’ economic outlook became less negative. Apple (Information Technology) was among the top absolute contributors to performance.
The three largest detractors from benchmark-relative performance were NII Holdings (Telecommunication Services), JPMorgan Chase (Financials), and Covidien (Financials). In the first half of the period the Fund eliminated its position in NII Holdings, a wireless communication services provider in Mexico, Brazil, Argentina and Peru, amid concerns over the effects of a global economic slowdown on Latin American economies; not holding the position as the price appreciated later in the period hurt benchmark-relative returns. Shares of global diversified bank JPMorgan Chase declined due to the company’s exposures to consumer and large corporate credit. Covidien continues to transition into a stand-alone global healthcare products company following its spinout from Tyco, providing health care products for use in clinical and home settings. Its stock price suffered during the period due to concerns that restructuring would result in below-consensus earnings, as well as fears that foreign exchange volatility would hurt earnings. The Fund eliminated its position in the stock early in the period. Another notable detractor from absolute returns was Genzyme (Health Care).
What is the outlook?
It is increasingly clear that the U.S. is emerging from a deep recession. The rate of increase in unemployment has slowed, industrial production leading indicators are pointing to an expansion, and the housing market has shown some signs of stabilization. The U.S. government continues to reshape the financial playing field through stimulus packages, massive loans to impaired private sector companies, and other programs, all taken with an eye towards thawing the credit markets and placing a floor on housing price declines and a ceiling on housing inventory.
The Fund seeks to add value through bottom-up security selection, with a goal of creating a diversified portfolio of high-quality growth companies with attractive valuations. Investment decisions are based primarily on independent, bottom-up, fundamental research. As of the end of the period, the Fund was most overweight Information Technology, Industrials, and Energy and most underweight (i.e. the Fund’s sector position was less than the benchmark position) Consumer Staples, Materials, and Utilities relative to the Fund’s benchmark.
Diversification by Industry
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

 

The Hartford Fundamental Growth Fund
Schedule of Investments
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Fundamental Growth Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Fundamental Growth Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Fundamental Growth Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Fundamental Growth Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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     $ —  
 
            
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Fundamental Growth Fund
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 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

 

The Hartford Fundamental Growth Fund
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

 

The Hartford Fundamental Growth Fund
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
   $ —     $ 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

 

The Hartford Fundamental Growth Fund
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  
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
     213     $ 1,666  
For the Year Ended October 31, 2008
     5     $ 58  

17

 

The Hartford Fundamental Growth Fund
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

 

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19

 

The Hartford Fundamental Growth Fund
Financial Highlights
- 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
   $ 7.57     $ 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

 

- 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)
 
                                                
 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Fundamental Growth Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Fundamental Growth Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

22

 

The Hartford Fundamental Growth Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Fundamental Growth Fund
Directors and Officers (Unaudited) – (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

25

 

The Hartford Fundamental Growth Fund
Federal Tax Information (Unaudited)
The Fund made no capital gain or income distributions for the fiscal year ended October 31, 2009.

26

 

The Hartford Fundamental Growth Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Fundamental Growth Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Fundamental Growth Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act. With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

28

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.

29

 

The Hartford Fundamental Growth Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

30

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-14 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

The Hartford Global Enhanced Dividend Fund
Table of Contents
         
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.
Performance Overview(1) 11/28/07 - 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(PERFORMANCE GRAPH)
MSCI World Value Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance (excluding the U.S. and Canada) of the value securities within the MSCI EAFE Index.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                 
    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
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)   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 Manager
Paul Bukowski
Vice President
How did the Fund perform?
The Class A shares of The Hartford Global Enhanced Dividend Fund returned 7.90%, before sales charge, for the twelve-month period ended October 31, 2009, underperforming its benchmark, the MSCI World Value Index, which returned 18.54% for the same period.
Why did the Fund perform this way?
The Fund’s benchmark relative (i.e. performance of the Fund as measured against the benchmark) underperformance came from two sources. The first source was the rally in growth stocks in early 2009. The Fund did not participate in the rally since most of the Fund’s holdings (dividend yielding stocks) have moderate rather than high growth prospects. The second source of underperformance was the high-beta, low-profitability, low-quality stock rally which began in March. The Fund seeks to invest only in high-quality, profitable stocks. Offsetting these two negative impacts is the more recent flight to quality, which had investors looking for higher-quality, profitable, strong yielding companies, which is more indicative of the Fund’s holdings.
During the period, unfavorable security selection in the Energy, Financials, and Consumer Discretionary sectors were partially offset by strong security selection in the Health Care sector. With

2

 

regard to sector allocation, the Fund’s overweight (i.e. the Fund’s sector position was greater than the benchmark position) to Utilities added to performance, while the Fund’s underweight (i.e. the Fund’s sector position was less than the benchmark position) to Financials and Consumer Discretionary detracted from performance. From a country perspective, the Fund benefited from stock selection within Japan, while stock selection within the United States detracted from performance.
Among the largest contributors to relative performance were overweight allocations in Seagate Technologies (Technology) and Oshkosh Corp. (Industrials). Seagate posted strong results as its cost cutting initiatives boosted its bottom line while it continued to raise its estimated 2010 revenues. Oshkosh posted good earnings driven by strong government sales, and, the company is well positioned to take advantage of increased government infrastructure spending.
Among the largest detractors to relative performance were underweight allocations in ING Groep N.V. (Financials) and Sterlite Industries (Materials). ING has performed strongly since March of this year, even beating earnings expectations in the latest quarter. Sterlite posted good second quarter results and had strong returns similar to their peers in the Copper industry.
What is the outlook?
Investor appetite for risk changed dramatically over the course of this reporting period. At the beginning of the period fear dominated the market as high profile companies that were “too big to fail” were failing, and the government was scrambling to keep the financial system functioning. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter. We believe that going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
The Fund’s current top holdings include British Petroleum (Energy) and Total S.A. (Energy). Both companies have attractive dividend yields relative to their industry and have strong business fundamentals. The Fund invests in companies that have compelling yields along with sound fundamentals. The Fund’s systematic approach weighs more than 80 fundamental characteristics across four broad categories, including business behavior, management behavior, valuation and investor behavior.
Diversification by Industry — Long Positions
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

 

Diversification by Industry — Securities Sold Short
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 %
 
        
Diversification by Country — Long Positions
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 %
 
        
Diversification by Country — Securities Sold Short
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

 

The Hartford Global Enhanced Dividend Fund
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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Global Enhanced Dividend Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
       
 
            
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Global Enhanced Dividend Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Global Enhanced Dividend Fund
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.
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford Global Enhanced Dividend Fund
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.
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Global Enhanced Dividend Fund
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  
 
      
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford Global Enhanced Dividend Fund
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  
 
      
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford Global Enhanced Dividend Fund
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.
The accompanying notes are an integral part of these financial statements.

14

 

The Hartford Global Enhanced Dividend Fund
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

 

The Hartford Global Enhanced Dividend Fund
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

 

The Hartford Global Enhanced Dividend Fund
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

 

The Hartford Global Enhanced Dividend Fund
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

 

The Hartford Global Enhanced Dividend Fund
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

 

The Hartford Global Enhanced Dividend Fund
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

 

[This page is intentionally left blank]

25

 

The Hartford Global Enhanced Dividend Fund
Financial Highlights
- 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
   $ 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

 

- 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)
                                                     
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Global Enhanced Dividend Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended and the statements of changes in net assets and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Global Enhanced Dividend Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended and the changes in its net assets and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

28

 

The Hartford Global Enhanced Dividend Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford Global Enhanced Dividend Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

31

 

The Hartford Global Enhanced Dividend Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

32

 

The Hartford Global Enhanced Dividend Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund (excluding costs incurred in executing short sales) and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only (excluding costs incurred in executing short sales) and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Global Enhanced Dividend Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Global Enhanced Dividend Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

34

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In

35

 

The Hartford Global Enhanced Dividend Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

36

 

The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

37

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford Global Equity Fund
Table of Contents
         
Manager Discussions (Unaudited)
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The Hartford Global Equity Fund inception 02/29/2008
(subadvised by Wellington Management Company, LLP)
 
Investment objective — Seeks long-term capital appreciation.
Performance Overview(1) 2/29/08 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
MSCI All Country World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                 
    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
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)   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
How did the Fund perform?
The Class A shares of The Hartford Global Equity Fund returned 23.65%, before sales charge, for the twelve-month period ended October 31, 2009, outperforming its benchmark, the MSCI All Country World Index, which returned 23.42% for the same period. The Fund also outperformed the 21.50% return of the average fund in the Lipper Global Multi-Cap Core peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
Broad global equity markets rose during the period, but this overall decline masks two significantly different market environments. From the beginning of November through early March stocks fell sharply, reflecting deepening economic worries. From early March through October stocks rallied as investors came to believe that a Depression-like scenario was less likely. In this environment, sector returns within the MSCI All Country World Index diverged widely for the twelve-month period ending October 31, 2009. Materials (+50%), Information Technology (+33%), and Consumer Discretionary (+26%) rose the most while returns in Health Care (+10%), Consumer Staples (+19%), and Telecommunication Services (+22%) lagged.
The Fund’s outperformance versus the benchmark was driven by security selection, which was strongest in the Health Care, Energy, and Consumer Discretionary sectors. Offsetting this was weaker

2

 

stock selection within the Industrials, Information Technology, and Telecommunication Services sectors. Sector allocation detracted modestly from relative (i.e. performance of the Fund as measured against the benchmark) performance due to our average underweight (i.e. the Fund’s sector position was less than the benchmark position) exposures to the Telecommunications, Information Technology, and Energy sectors. A modest cash position also hurt benchmark-relative performance during the period.
Top contributors to relative performance during the period included DnB Nor (Financials), Schering Plough (Health Care), and Cott Corporation (Consumer Staples). Investors’ belief in the relative balance sheet strength of DnB Nor’s Norway-based financial services company, led shares higher. Schering-Plough’s share price jumped after being acquired by Merck at a premium. Non-alcoholic drink maker Cott Corporation’s shares surged due to good cost controls and higher volumes in North America as consumers traded down to value brands, improving net selling prices. Apple (Information Technology) was a top contributor to absolute (i.e. total return) performance.
The largest detractors from relative returns were ACE (Financials), Popular (Financials), and Leap Wireless (Telecommunications). Shares of worldwide property/casualty insurance and reinsurance provider ACE fell on concerns about the impact of various government programs and falling book value. Popular, a diversified U.S. financial services company targeting the Hispanic market, reduced its dividend by 75 percent, causing shares to decline significantly. Wireless communications provider Leap Wireless’ shares underperformed due to a dilutive equity raise and the negative impact current economic conditions have had on its core customers. Japan Tobacco (Consumer Discretionary) and Capital One (Financials) were also among the top detractors from absolute performance.
What is the outlook?
It is increasingly clear that the U.S. is emerging from a deep recession. The rate of increase in unemployment has slowed, industrial production leading indicators are pointing to an expansion, and the housing market has shown some signs of stabilization. The government continues to reshape the financial playing field through stimulus packages, massive loans to impaired private sector companies, and other programs in an attempt at thawing credit markets and placing a floor on the house price declines and a ceiling on housing inventory. These moves should continue to help mitigate some of the negative economic pressures, and while the outlook remains uncertain, the equity market’s improved performance since March lows show investors are anticipating a recovery.
The Fund ended the period most overweight (i.e. the Fund’s sector position was greater than the benchmark position) the Consumer Discretionary, Health Care, and Information Technology sectors and most underweight the Industrials, Consumer Staples, Financials sectors. The Fund’s largest absolute weightings were in the Financials, Information Technology, and Energy sectors.
Diversification by Industry
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

 

Diversification by Country
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

 

The Hartford Global Equity Fund
Schedule of Investments
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Global Equity Fund
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Global Equity Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
       
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Global Equity Fund
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  
The aggregate value of these securities at October 31, 2009 was $7 which represents 0.01% of total net assets.
The accompanying notes are an integral part of these financial statements.

10

 

Forward Foreign Currency Contracts Outstanding at October 31, 2009
                             
                        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.
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Global Equity Fund
Investment Valuation Hierarchy Level Summary
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.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
                                         
    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).
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford Global Equity Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford Global Equity Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

14

 

The Hartford Global Equity Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
            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.
The accompanying notes are an integral part of these financial statements.

15

 

The Hartford Global Equity Fund
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 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

 

The Hartford Global Equity Fund
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

 

The Hartford Global Equity Fund
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

 

The Hartford Global Equity Fund
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

 

The Hartford Global Equity Fund
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

 

The Hartford Global Equity Fund
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

 

The Hartford Global Equity Fund
Financial Highlights
- 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
   $ 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

 

- 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)
                                                         
       
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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Global Equity Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Global Equity Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended and the changes in its net assets and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
ERNST & YOUNG LLP
Minneapolis, MN
December 15, 2009

30

 

The Hartford Global Equity Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Global Equity Fund
Directors and Officers (Unaudited) — (continued)
     Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

33

 

The Hartford Global Equity Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
The Fund intends to make an election under the Internal Revenue Code Section 853 to pass-through foreign taxes paid by the Fund to their shareholders in the amount of $36.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

34

 

The Hartford Global Equity Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)  
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Global Equity Fund
Shareholder Meeting Results (Unaudited)
The following proposals were addressed and approved during the period at special meetings of shareholders held on August 4, 2009.
Proposal to approve a Plan of Reorganization providing for the acquisition of all of the assets and liabilities of The Hartford Global Communications Fund (the “Acquired Fund”) by The Hartford Global Equity Fund (the “Acquiring Fund”) solely in exchange for shares of the Acquiring Fund, followed by the complete liquidation of the Acquired Fund.
                                 
Fund Name   For   Against   Abstain   Uninstructed
The Hartford Global Communications Fund
     1,492,303.83       102,080.21       105,896.73       131,670.00  
Proposal to approve a Plan of Reorganization providing for the acquisition of all of the assets and liabilities of The Hartford Global Financial Services Fund (the “Acquired Fund”) by The Hartford Global Equity Fund (the “Acquiring Fund”) solely in exchange for shares of the Acquiring Fund, followed by the complete liquidation of the Acquired Fund.
                                 
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  
Proposal to approve a Plan of Reorganization providing for the acquisition of all of the assets and liabilities of The Hartford Global Technology Fund (the “Acquired Fund”) by The Hartford Global Equity Fund (the “Acquiring Fund”) solely in exchange for shares of the Acquiring Fund, followed by the complete liquidation of the Acquired Fund.
                                 
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

 

The Hartford Global Equity Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Global Equity Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

37

 

The Hartford Global Equity Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by

38

 

Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO. The Board noted Management’s proposal to increase the levels above which expenses will be reimbursed for each share class by 0.10%.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

39

 

The Hartford Global Equity Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

40

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-15 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)            
(THE HARTFORD LOGO)

 

 

The Hartford Global Growth Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    4  
 
    6  
 
    7  
 
    8  
 
    9  
 
    10  
 
    20  
 
    22  
 
    23  
 
    25  
 
    25  
 
    26  
 
    27  
 
    28  

 

 

The Hartford Global Growth Fund inception 09/30/1998
(subadvised by Wellington Management Company, LLP)   Investment objective — Seeks growth of captial.
Performance Overview(1) 10/31/99 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
MSCI World Growth Index is a broad-based unmanaged market capitalization-weighted total return index which measures the performance of growth securities in 23 developed-country global equity markets including the U.S., Canada, Europe, Australia, New Zealand and the Far East.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1)   Growth of a $10,000 investment in Classes B, C, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   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
How did the Fund perform?
The Class A shares of The Hartford Global Growth Fund returned 19.33%, before sales charge, for the twelve-month period ended October 31, 2009, underperforming its benchmark, the MSCI World Growth Index, which returned 19.75% for the same period. The Fund outperformed the 18.28% return of the average fund in the Lipper Global Large-Cap Growth Funds peer group, a group of funds with investment strategies similar to those of the fund.
Why did the Fund perform this way?
During the twelve-month period ended October 31, 2009, global equities declined through March amid increasing signs of a deeper and more protracted recession and then rebounded strongly as governments around the world increased their involvement to help mitigate the financial crisis. Some encouraging economic data and better-than-expected corporate earnings boosted investors’ enthusiasm for stocks. The change in sentiment provided a tailwind for both growth stocks (19.7%) and value stocks (18.5%), as measured by the MSCI World Growth Index and the MSCI World Value Indexes, respectively. Within the MSCI World Growth Index, all ten sectors posted positive returns. The Telecommunication Services (44%), Materials (39%), and Information Technology (29%) sectors performed the best, while the defensive Utilities (1%) and Health Care (9%) sectors lagged.

2

 

Security selection contributed positively to relative (i.e. performance of the Fund as measured against the benchmark) performance in the Financials, Health Care, and Energy sectors. This was offset by weaker selection in the Telecommunication Services, Materials, Information Technology, and Industrials sectors. Relative performance also benefited from the Fund’s overweight (i.e. the Fund’s sector position was greater than the benchmark position) to Telecommunications Services and underweights (i.e. the Fund’s sector position was less than the benchmark position) to Utilities and Consumer Staples; however, the Fund’s overweights to Financials, Health Care and Energy hurt relative results.
Wyeth (Health Care), Volkswagen (Consumer Discretionary), and Prudential Financial (Financials) were the leading contributors to benchmark-relative performance. Shares of U.S. pharmaceutical company Wyeth rose upon the announcement of Pfizer’s agreement to purchase the company. We eliminated the position during the period. The Fund’s benchmark-relative performance benefited from avoiding German car maker Volkswagen, which is a component of the benchmark. The stock continued to fall after the rapid appreciation seen in October 2008, which had been driven by Porsche’s move to take a controlling stake in the company. Prudential Financial, a leading diversified financial services company, benefited as investors gained confidence that the worst of the financial crisis was behind the company. Shares rose after the firm reported better-than-expected first quarter earnings despite continued investment losses. Top absolute (i.e. total return) contributors included Standard Chartered (Financials) and Goldman Sachs (Financials).
The top detractors from the Fund’s relative performance were Las Vegas Sands (Consumer Discretionary), SunPower (Industrials), and MetroPCS Communications (Telecommunication Services). Shares of Las Vegas Sands, a developer and operator of hotel, gaming, and resort businesses, fell due to disappointing earnings and concerns that the company’s balance sheet was overstretched. Shares of solar panel manufacturer SunPower moved lower after solar-sector peer First Solar commented on the potential risk of oversupply in the market. Wireless telecommunications service provider MetroPCS posted weaker-than-expected quarterly earnings as the firm faced increased competition, driving shares sharply lower. Significant detractors from absolute returns included diversified financial services and bank holding company Wells Fargo (Financials) and software company Electronic Arts (Information Technology).
What is the outlook?
Global economies continued the healing process during the latter part of the period. Our overall positioning is consistent with an improving economic outlook as aggressive stimulus measures have proven effective at providing liquidity and have eased financial market pressures. Against this backdrop, we continue to invest in globally competitive growth companies with accelerating fundamentals.
Portfolio construction is a bottom-up (i.e. stock by stock fundamental research) process based on intensive company research. Allocations among sectors are the result of individual stock decisions. At the end of the period, our stock-by-stock investment process resulted in greater-than-benchmark weights in the cyclical Financials, Consumer Discretionary, and Information Technology sectors. The Fund held below-benchmark weights in the traditionally defensive Consumer Staples, Health Care, and Utilities sectors. In Financials, improving fundamentals and the deleveraging of balance sheets make many of the high quality names in the sector attractive at the current depressed valuations. Top positions relative to the benchmark at the end of October included Bank of America, Banco Santander, and BOC Hong Kong. Our below-benchmark weight in Health Care reflects the fact that we are finding limited opportunities for growth in that sector relative to companies in other sectors.
Diversification by Industry
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 %
 
        
Diversification by Country
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

 

The Hartford Global Growth Fund
Schedule of Investments
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Global Growth Fund
Investment Valuation Hierarchy Level Summary
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     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Global Growth Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Global Growth Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Global Growth Fund
Statement of Changes in Net Assets
(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  
 
            
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Global Growth Fund
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 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

 

The Hartford Global Growth Fund
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

 

The Hartford Global Growth Fund
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

 

The Hartford Global Growth Fund
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

 

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
     1.13 %     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

 

The Hartford Global Growth Fund
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

 

The Hartford Global Growth Fund
Financial Highlights
- 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
   $ 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

 

- 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)
 
                                                        
 
     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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Global Growth Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Global Growth Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(Ernet & Young LLP)
Minneapolis, MN
December 15, 2009

22

 

The Hartford Global Growth Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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.

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The Hartford Global Growth Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

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The Hartford Global Growth Fund
Federal Tax Information (Unaudited)
The Fund made no capital gain or income distributions for the fiscal year ended October 31, 2009.

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The Hartford Global Growth Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Global Growth Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Global Growth Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

28

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over

29

 

The Hartford Global Growth Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

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This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-16 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
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The Hartford Global Health Fund
Table of Contents
         
Manager Discussions (Unaudited)
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Financial Statements
        
 
        
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    10  
 
        
    20  
 
        
    22  
 
        
    23  
 
        
    25  
 
        
    25  
 
        
    26  
 
        
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The Hartford Global Health Fund inception 05/01/2000
(subadvised by Wellington Management Company, LLP)   Investment objective — Seeks long-term capital appreciation.
Performance Overview(1) 5/01/00 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
S&P North American Health Care Sector Indexis a modified capitalization-weighted index based on United States headquartered health care companies. Stocks in the index are weighted such that each stock is no more than 7.5% of the market capitalization as of the most recent reconstitution date. The companies included in the index must be common stocks and be traded on the American Stock Exchange, Nasdaq or the New York Stock Exchange and meet certain established market capitalization levels.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
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            
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

 

While HMO stocks were the hardest hit, selling was indiscriminate; even industries that stand to benefit from health care reform, such as generic drug makers, were dragged down in the sell-off. After that very difficult start to the year, healthcare stocks demonstrated an impressive turnaround through October 31, 2009.
Despite the turnaround, Health Care stocks (9%) modestly underperformed the broader U.S. market (10%) and the global equity market (19%) during the period, as measured by the S&P North American Health Care, S&P 500, and the MSCI World Indexes respectively. Within the S&P North American Health Care Index, three out of the four sub-sectors posted positive returns. Health Services (+23%) and Pharmaceuticals (+15%) performed well. Medical Products (-1%) and Specialty Pharmaceuticals/Biotechnology (+0%) underperformed relative to the other sub-sectors.
The Fund slightly underperformed its benchmark during the period, with underweight (i.e. the Fund’s sector position was less than the benchmark position) allocations to the Pharmaceuticals and Health Services sub-sectors and an overweight (i.e. the Fund’s sector position was greater than the benchmark position) allocation to Specialty Pharmaceuticals/Biotechnology offsetting the benefits of strong stock selection in Pharmaceuticals and Health Services and an underweight allocation to Medical Products sub-sectors.
Holdings of Celera, Wyeth, and Medicines Company detracted from benchmark-relative performance. Shares in molecular diagnostics company Celera fell during the period after the company announced 2009 guidance below analysts’ expectations. Shares of pharmaceutical company Wyeth rose sharply after agreeing to be acquired by Pfizer. The stock detracted from benchmark-relative results due to our underweight position. Specialty pharma company Medicines Company’s shares fell during the period as the company discontinued Phase III clinical trials for the development of its experimental blood clotting treatment. Top detractors from absolute (i.e. total return) performance included U.S.-based biopharmaceutical company Progenics Pharmaceuticals and health care products company Covidien.
Holdings of Schering-Plough, UCB, and Abbott Laboratories were among the top contributors to benchmark-relative performance during the period. Shares of global health care company Schering-Plough rose after the company received a takeover offer from Merck in the first quarter of 2009. Pharmaceutical company UCB announced FDA approval for Cimzia, used to treat Crohn’s disease, and positive results for clinical trials of its lupus drug Epratuzumab, each of which drove shares higher. Shares of Abbott Laboratories moved higher early in the first quarter of 2009 after reporting solid earnings in mid-January. We eliminated our positions in Schering-Plough and Abbott Laboratories during the period. Top contributors to absolute performance also included pharmaceutical companies Pfizer and Shionogi.
What is the outlook?
We continue to believe that the odds of the enactment of some type of healthcare reform are high. Nonetheless, as we expected, leading reform proposals are incremental and built on our existing systems and do not call for a systemic overhaul or introduction of a single-payer model. Despite the explosive town hall meetings that took place during the U.S. Congressional recess, the volatility of healthcare stocks has declined substantially in recent months, in part because the ultimate resolution of the healthcare debate is increasingly evident. However, with healthcare stocks lagging the performance of the S&P 500 Index year to date, and with a projected price earnings ratio of 12 times 2010 earnings, we are very optimistic about the sector’s future performance — especially after the reform debate moves to the back burner.
Against this backdrop, the Fund ended the period most overweight the Biotechnology sector and underweight the Pharmaceuticals and Health Care Services sectors relative to the benchmark.
Diversification by Industry
as of October 31, 2009
         
    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 %
 
        
Diversification by Country
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

 

The Hartford Global Health Fund
Schedule of Investments
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  
The accompanying notes are an integral part of these financial statements.

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   $   —
The aggregate value of these securities at October 31, 2009 was $42 which represents 0.01% of total net assets.
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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.
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Global Health Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Global Health Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Global Health Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Global Health Fund
Statement of Changes in Net Assets
(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     $ —  
 
            
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Global Health Fund
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 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.
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

 

The Hartford Global Health Fund
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 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

 

The Hartford Global Health Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Global Health Fund
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

 

The Hartford Global Health Fund
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  
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
   $ 366,727  
Sales Proceeds Excluding U.S. Government Obligations
     657,720  
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
     3,167       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
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

 

The Hartford Global Health Fund
Financial Highlights
— 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
   $ 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

 

— 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)
                                                     
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Global Health Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Global Health Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

22

 

The Hartford Global Health Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford Global Health Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

25

 

The Hartford Global Health Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

26

 

The Hartford Global Health Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Global Health Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Global Health Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

28

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets

29

 

The Hartford Global Health Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

30

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-17 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford Growth Allocation Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    4  
 
    5  
 
    6  
 
    7  
 
    8  
 
    9  
 
    16  
 
    18  
 
    19  
 
    21  
 
    21  
 
    22  
 
    23  
 
    24  

 

 

The Hartford Growth Allocation Fund inception 05/28/2004
(subadvised by Hartford Investment Management Company)   Investment objective — Seeks 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
(LINE GRAPH)
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
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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
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
How did the Fund perform?
The Class A shares of The Hartford Growth Allocation Fund returned 17.06%, before sales charges, 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 Allocation Growth category, a group of funds with investment strategies similar to those of the Fund, was 16.15%.
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

 

During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Within fixed income, yields decreased during the year, with the ten-year Treasury note yield falling 57 basis points to 3.38% and the five-year Treasury note yield falling 52 basis points to 2.31%. Within the major sectors of the Barclays Capital U.S. Aggregate Index, Credit was the top performer, while Agency securities were the worst. High Yield asset classes such as U.S. high yield bonds, floating rate notes, and Emerging Market Debt significantly outperformed the Barclays Capital U.S. Aggregate Index. The Barclays Capital High Yield index posted strong results, up 48.1% over the period.
Generally, the Fund’s target asset allocation is set at approximately 80% equities and 20% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the fund’s performance. Specifically, favorable allocations within the international markets into emerging markets, international small-cap, and international real estate investment trusts (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The Fund benefited from our strategic asset allocation decisions within fixed income. Allocation to TIPS (Treasury Inflation Protected Securities) and intermediate-term bonds more than offset less favorable allocations to short-term bonds. The Fund’s duration (i.e. sensitivity to changes in interest rates) was targeted to be less than the Barclays Capital U.S. Aggregate Index, a decision based on the risk preferences of the Fund. For the year, duration positioning detracted from performance.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it has behaved historically. Finally, a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our underlying fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). No hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required for the reporting period.
During the period, the fund has continued to utilize exchange traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Specifically, the Fund has set target allocations to ETFs that provide U.S. and international real estate exposure.
What is the Outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters. We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2%-3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there are no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months-3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
We have positioned the Fund with an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to international equities. In addition, we have reversed the underweight in inflation protected securities. Lastly, the Fund increased its exposure to REITs, recognizing the inflationary benefits of the asset class.
Composition by Investments
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

 

The Hartford Growth Allocation Fund
Schedule of Investments
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Growth Allocation Fund
Investment Valuation Hierarchy Level Summary
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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Growth Allocation Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Growth Allocation Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Growth Allocation Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Growth Allocation Fund
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 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

 

The Hartford Growth Allocation Fund
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

 

The Hartford Growth Allocation Fund
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

 

The Hartford Growth Allocation Fund
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

 

The Hartford Growth Allocation Fund
Financial Highlights
— 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
   $ 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

 

— 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)
                                                     
  17.06 %   $ 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Growth Allocation Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Growth Allocation Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Growth Allocation Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Growth Allocation Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

21

 

The Hartford Growth Allocation Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Growth Allocation Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Growth Allocation Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Growth Allocation Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund

24

 

Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In

25

 

The Hartford Growth Allocation Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

26

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-18 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford High Yield Fund

 

 

The Hartford High Yield Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    5  
 
    11  
 
    12  
 
    13  
 
    14  
 
    15  
 
    28  
 
    30  
 
    31  
 
    33  
 
    33  
 
    34  
 
    35  
 
    36  
 

 

 

The Hartford High Yield Fund inception 09/30/1998
(subadvised by Hartford Investment Management Company)
  Investment objective — Seeks high current income. Growth of capital is a secondary objective.
Performance Overview(1) 10/31/99 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Barclays Capital U.S. Corporate High Yield Bond Index is an unmanaged broad-based market value-weighted index that tracks the total return performance of non-investment grade, fixed-rate, publicly placed, dollar denominated and nonconvertible debt registered with the SEC.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
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)   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
How did the Fund perform?
The Class A shares of The Hartford High Yield Fund returned 35.01%, before sales charge, for the twelve-month period ended October 31, 2009. In comparison, its benchmark, the Barclays Capital U.S. Corporate High Yield Bond Index returned 47.96%, while the average return of the Lipper High Current Yield Funds category, a group of funds with investment strategies similar to those of the Fund, was 35.3%.
Why did the Fund perform this way?
The performance for the high yield market (as represented by the Barclays Capital U.S. Corporate High Yield Bond Index) was the 2nd best twelve-month total return for the high yield market on record. This is somewhat astounding given that the twelve-month period started with one of the worst monthly performance numbers for the high yield market on record, -9.4% (last November). This period in retrospect turned out to be the peak of the financial crisis for high yield.

2

 

In December 2008 the high yield market led the rally out of the financial crisis, posting a 7.7% return, which turned out to be the beginning of the strongest high yield bull market in history. The Fund began the twelve-month period defensively positioned, with its cash allocation approaching 10%, reflecting a concerted effort to reduce risk earlier in 2008, as our analyst team began to identify issuers that would be potentially impacted by the weakening economy. Even as the market showed signs of improvement, the Fund did not immediately re-position to chase the early returns; instead it continued to utilize its bottom-up (i.e. stock by stock fundamental research), value-oriented investment strategy. This disciplined investment approach led to significant under-weights (versus the benchmark) in the sectors that were expected to be heavily impacted by the drop-off in the economy. These sectors included Autos, Manufacturing, Consumer Cyclicals and most significantly, Financials. In hindsight, the Fund was positioned defensively for too long as these sectors turned out to the best performers over the twelve-month period.
The Fund’s largest underweight position at the beginning of the period was to the high yield Financial sector, which turned out to be the top performing sector for the twelve-month period ended October 31, 2009. The Fund has historically avoided this sector under the premise that the cost of capital for these financials puts them at an inherent disadvantage to their investment grade competitors. In addition, the Government’s somewhat erratic involvement in the Financial sector (bailing out Bear Stearns, yet letting Lehman Brothers collapse) only served to further complicate investment decisions in an already volatile sector. As a result of its defensive positioning in general and its significant underweight to the Financials sector in particular, the Fund severely lagged the benchmark during the seven months through May, which included the best six-month performance for high yield on record to that point.
The confluence of the results of the Treasury conducted stress tests on the nation’s largest 19 banks and first quarter earnings that showed stabilization in corporate profits provided a framework to take up risk in the Fund in a manner consistent with the Fund’s investment process. The stress tests provided a framework for investing in high yield financials, enabling the Fund to take advantage of bank recapitalizations. At the same time, the Fund added risk in Industrial sectors where the ability to value companies and their debt securities improved substantially as earnings stabilized. By the end of June, the Fund’s risk profile was consistent with the broader high yield market, allowing it to produce returns that were more consistent with the market over the final five months of the period.
What is the outlook?
With the market up 48% over the last twelve-months, it is logical to ask, whether we have come too far too fast. Indeed, the high yield market has outpaced every other developed broad equity index over the last year, so from a relative value perspective, it seems the market may be due for a price correction. However, high yield market spreads (over treasuries) are still well below their historical average and median. In addition, strong new issue activity in the high yield market has had the impact of improving corporate liquidity while significantly reducing looming debt maturities on companies’ balance sheets. Furthermore, the structural quality of new issue high yield bonds are benefitting from the addition of security packages. This should lead to lower default rates over the coming twelve-months and higher recoveries over the next cycle.
We see the high yield market at a cross-road. Fundamentals are improving, but prices are not as historically cheap as they were. In order for the high yield market to continue its upward trend, monetary policy will have to remain extraordinarily accommodative, which is not a given. We have already begun to see the Government implement tightening simply by letting various programs expire, which is a trend that we expect to continue.
Distribution by Credit Quality
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 %
 
        
Distribution by Security Type
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

 

Diversification by Industry
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

 

The Hartford High Yield Fund
Schedule of Investments
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford High Yield Fund
Schedule of Investments — (continued)
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  
The accompanying notes are an integral part of these financial statements.

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  
       
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford High Yield Fund
Schedule of Investments — (continued)
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford High Yield Fund
Schedule of Investments — (continued)
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.
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford High Yield Fund
Investment Valuation Hierarchy Level Summary
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.
         Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
                                                 
                    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).
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford High Yield Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford High Yield Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford High Yield Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

14

 

The Hartford High Yield Fund
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 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

 

The Hartford High Yield Fund
Notes to Financial Statements — (continued)
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

 

The Hartford High Yield Fund
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 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

 

The Hartford High Yield Fund
Notes to Financial Statements — (continued)
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

 

The Hartford High Yield Fund
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
   $ 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

 

The Hartford High Yield Fund
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
     1.15 %     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

 

The Hartford High Yield Fund
Notes to Financial Statements — (continued)
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

 

The Hartford High Yield Fund
Financial Highlights
— 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
   $ 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

 

— 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)
                                                         
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford High Yield Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian, agent banks, and brokers or by other appropriate auditing procedures where replies from agent banks or brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford High Yield Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

30

 

The Hartford High Yield Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford High Yield Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

33

 

The Hartford High Yield Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

34

 

The Hartford High Yield Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford High Yield Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford High Yield Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

36

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO. The Board noted Management’s proposal to increase the levels above which expenses will be reimbursed for each share class by 0.05%.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.

37

 

The Hartford High Yield Municipal Bond Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited — (continued)
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

38

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-21 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford High Yield Municipal Bond Fund

 

 

The Hartford High Yield Municipal Bond Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    5  
 
    11  
 
    12  
 
    13  
 
    14  
 
    15  
 
    24  
 
    26  
 
    27  
 
    29  
 
    29  
 
    30  
 
    31  
 
    32  

 

 

The Hartford High Yield Municipal Bond Fund inception 05/31/2007
(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.
Performance Overview(1) 5/31/07 - 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Barclays Capital Municipal Non-Investment Grade Debt Index is an unmanaged index made up of bonds that are non-investment grade, unrated, or rated below Ba1 by Moody’s Investors Service with a remaining maturity of at least one year.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                 
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(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.
Portfolio Managers
Christopher Bade
Vice President
How did the Fund perform?
The Class A shares of The Hartford High Yield Municipal Bond Fund returned 16.93%, before sales charge, for the twelve-month period ended October 31, 2009. In comparison, its benchmark, the Barclays Capital Municipal Non-Investment Grade Index returned 14.52% while the average return of the Lipper High Yield Municipal Funds category, a group of funds with investment strategies similar to those of the Fund, was 16.94%.
Why did the Fund perform this way?
Like most fixed income markets, the municipal market recovered dramatically over the twelve-month period ended October 31, 2009, after ending last fiscal year in a relative free-fall. Performance over the period was driven by a significant demand/supply imbalance leading to price appreciation as credit spreads tightened (i.e. short and long term interest rates moving closer together) and the municipal curve flattened (yield difference decreased between long and short-term maturities). Demand was strong over this period, particularly from retail investors and retail buyers of municipal mutual funds that were drawn to the market given the

2

 

“cheap” municipal pricing versus other taxable benchmarks, attractive incremental yield (for additional risk), possibility of higher federal taxes going forward, and the low historical default rates of municipal credits even during recessionary times.
Total municipal issuance for the period was down approximately 6% year-over-year, while issuance in high yield municipals (non-investment grade) was extremely limited. Supply within the traditional municipal high yield market should return as the economy improves. In the meantime, investors have been able to find excellent opportunities for yield generation within the investment grade municipal space. Total tax-exempt supply was down more than 11% due to the introduction of Build America Bonds (BABs), which are taxable bonds created under the 2009 stimulus package that allow municipal issuers to access a broader investor base and derive savings through a direct subsidy from the Federal government. After a slow start, BAB issuance picked up substantially later in the year with the total amount at about $51 billion thus far in 2009, culminating in October where BAB issuance accounted for more than 30% of total municipal issuance volume.
The primary drivers of performance over the period relative (i.e. performance of the Fund as measured against the benchmark) to the benchmark were curve positioning (the Fund was long vs. the benchmark), sector allocation, and an underweight (i.e. the Fund’s sector position was less than the benchmark position) to non-investment grade bonds earlier in the period. The Fund’s underweight to non-investment grade bonds significantly supported benchmark relative performance during the severe selloff and credit spread widening (i.e. short and long term interest rates moving farther apart) in late 2008, but generally detracted from performance in 2009. The municipal high yield market is highly technical and as such, there is a strong correlation between fund flows into high yield mutual funds (the primary buyers of lower rated/non-rated bonds) and performance. Mutual fund flows were negative in 2008, but were robust for most of 2009 beginning in the first quarter.
In other words, there were two distinct periods of performance; late 2008 and 2009. The Fund’s fiscal year started with the continued technical weakness that hurt performance in 2008, but a powerful rally ensued in 2009 as liquidity and technical conditions improved, and the demand for high yield bonds increased. The Fund outperformed the benchmark during the first two months of 2009 based on the Fund’s higher quality bias (lower exposure to non-investment grade bonds), but underperformed the rest of the year as non-investment grade paper rallied and credit spreads tightened. The Fund has been and remains biased towards higher quality municipals in an effort to mitigate volatility during this fundamentally weak credit cycle that we expect will continue into 2010.
The Fund’s benchmark relative underweight to Industrial Revenue Bonds (corporate-backed bonds) hurt performance in 2009 as credit spreads collapsed in this sector due to increased demand for corporate bonds at distressed levels. An allocation to Non-rated Long-Term Care Facilities and Special Assessment Bonds also hurt performance as those issues continued to suffer from the housing recession and general economic downturn. Land secured bonds continued to be negatively impacted by stalled housing developments and increasing delinquencies/foreclosures.
The Fund benefited from sector allocations to Health Care, Education, Gaming, and Prison Bonds which outperformed as credit spreads tightened. An overweight (i.e. the Fund’s sector position was greater than the benchmark position) to Investment Grade Tobacco Bonds also contributed positively to performance over the period.
The Fund’s duration (i.e. sensitivity to changes in interest rates) was actively managed for optimal positioning during certain times of the year: a cash allocation and shorter bonds in 2008 (as needed) and then extending out longer on the municipal curve (22 years +) later in the fiscal year. This movement was consistent with the Fund’s primary objective of seeking high current income with a secondary objective of growth of capital since longer maturity bonds provided the best yield and outperformed as the curve flattened in 2009 (attributed to greater demand in the long end by mutual funds and the crowding out of tax-exempt supply by long taxable BABs).
What is your Outlook?
Following a powerful rally in the municipal high yield market, we remain selective on new purchases as credit spreads have tightened considerably and pricing is not as cheap as it once was. We expect further credit stress and “headline” risk in the municipal market as municipal issuers continue to address declining revenues and severe budget imbalances. Municipal fundamentals are likely to worsen into 2010 with lower tax revenues and wider budget gaps even as the national economy continues to recover. This will likely keep credit spreads wide on a historical basis and could potentially cause them to widen further. Although we expect fundamental conditions to worsen with more credit downgrades and negative headlines, the default experience for all municipal bonds has been historically low during all economic cycles. Downgrades and defaults may be more substantial for lower rated municipals, but they still should be relatively low compared to other taxable investments.
In the Fund, we will continue to look for opportunities further out on the curve (20+ years) where the supply/demand imbalance is most acute. Although we are not out of the woods fundamentally, we do not expect a substantial increase in municipal defaults, including high yield municipals, with the exception of Special Assessment and Land-Secured Bonds. During this period of weak municipal credit conditions, we remain cautious on high yield credit and will selectively buy non-investment grade bonds. However, with very limited high yield municipal supply, we will continue to actively purchase investment grade municipal bonds (while they remain at attractive spreads) which have less risk and volatility than traditional high yield municipals, yet are still generating attractive yields.
Distribution by Credit Quality
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

 

Diversification by Industry
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 %
 
        
Distribution by State
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

 

The Hartford High Yield Municipal Bond Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford High Yield Municipal Bond Fund
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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  
       
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford High Yield Municipal Bond Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford High Yield Municipal Bond Fund
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  
The aggregate value of these securities at October 31, 2009 was $5,149 which represents 1.25% of total net assets.
 
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.
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford High Yield Municipal Bond Fund
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     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford High Yield Municipal Bond Fund
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  
 
      
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford High Yield Municipal Bond Fund
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  
 
      
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford High Yield Municipal Bond Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

14

 

The Hartford High Yield Municipal Bond Fund
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

 

The Hartford High Yield Municipal Bond Fund
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

 

The Hartford High Yield Municipal Bond Fund
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

 

The Hartford High Yield Municipal Bond Fund
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

 

The Hartford High Yield Municipal Bond Fund
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

 

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23

 

The Hartford High Yield Municipal Bond Fund
Financial Highlights
                                                                                         
    - 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford High Yield Municipal Bond Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford High Yield Municipal Bond Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

26

 

The Hartford High Yield Municipal Bond Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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.

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The Hartford High Yield Municipal Bond Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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.

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Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

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The Hartford High Yield Municipal Bond Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                         
    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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

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The Hartford High Yield Municipal Bond Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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  

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The Hartford High Yield Municipal Bond Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford High Yield Municipal Bond Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

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Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered

33

 

The Hartford High Yield Municipal Bond Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited — (continued)
representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

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This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-22 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Income Fund

 

 

The Hartford Income Fund
Table of Contents
         
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.
Performance Overview(1) 10/31/02 - 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1)   Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC.
 
(3)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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
How did the Fund perform?
The Class A shares of The Hartford Income Fund returned 21.83%, before sales charge, for the twelve-month period ended October 31, 2009. In comparison, its benchmark, the Barclays Capital U.S. Aggregate Bond Index returned 13.79%, while the average return of the Lipper Corporate Debt A-Rated Funds category, a group of funds with investment strategies similar to those of the Fund, was 18.36%
Why did the Fund perform this way?
The twelve-month period ending October 31, 2009, had three phases. The last two months of 2008 were marked by continued broad weakness in asset prices. The first quarter of 2009 was unique for the recovery in industrial debt spreads across the rating spectrum, but weakness continued in equities, commercial real estate and bank and finance company debt. The third phase began mid March with the recovery of equities and was perpetuated by the expansion of Term Asset-Backed Securities Loan Facility (TALF), the initiation of Public-Private Investment Program (PPIP) and the successful results of the U. S. Department of the Treasury’s bank stress tests. Since the early part of second quarter 2009 all fixed income spread sectors (i.e. issues yielding more than Treasuries) have experienced spread tightening (i.e. short and long term interest rates moving closer together) and significant outperformance versus like maturity Treasuries.

2

 

The Fund began the year overweight (i.e. the Fund’s sector position was greater than the benchmark position) spread sectors such as Investment Grade and High Yield Corporate debt and subsequently added to those overweights as confidence was restored to the financial markets. It was this overweight to spread product and well timed expansion of the overweight that led to benchmark outperformance over the period.
The Fund maintained sizeable allocations to non-investment grade securities throughout the period. Specifically, the Fund had an average allocation to High Yield Corporate Bonds of 9% throughout the year. In addition, the Fund averaged a 6% allocation to bank loans. These sectors returned 48.0% and 32.7% for the twelve-month period as measured by the Barclays Capital U.S. Corporate High Yield Bond Index and the Barclay’s High Yield Bank Loan indices, respectively.
The Fund also had a benchmark overweight to investment grade credit throughout the period. The bulk of the overweight was expressed in the industrial sector. This average overweight to the asset class contributed positively to benchmark outperformance. The Fund was underweight (i.e. the Fund’s sector position was less than the benchmark position) the benchmark in Treasuries, Mortgage Backed Securities (MBS) and Agencies. Although Agencies and MBS had positive returns over the period, those returns significantly lagged those of the previously mentioned sectors.
Yield curve and duration (i.e. sensitivity to changes in interest rates) exposure was applied tactically throughout the period, but very little performance can be attributed to this positioning. This was due to the fact that the Fund had intermittent periods of both positive and negative contributions from yield curve / duration, in essence canceling each other out.
What is Your Outlook?
Our view of the yield curve is consistent with low growth and low inflation. We expect yields to remain in their current ranges across the curve (ten year range of 3.2%-3.8%). Longer maturities will continue to experience volatility with supply pressure, inflation concerns, dollar policy concerns and weak growth but will likely remain in a range as well. We think the shape of the short end (three months-three years) of the curve already implies the imminent removal of accommodative monetary policy, even though we do not think this is likely happen any time soon. Despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Structured products, namely Asset Backed Securities (ABS) and Commercial Mortgage Backed Securities (CMBS), have benefited significantly from the TALF and PPIP programs. Despite the tremendous price appreciation experienced in these sectors already, we believe opportunity remains. In the ABS space, auto receivables with accumulated capital cushions remain attractive. Similarly, the higher quality tranches of well underwritten CMBS structures remain attractive despite a less than rosy forecast for commercial real estate.
Corporate credit has had a record breaking year already, especially within the high yield market and investment grade market. Despite this performance, current spread levels remain congruent with past recessions, and we feel that the expected ongoing economic weakness is already “priced-in”.
We expect positive returns from corporate debt in the coming fourth quarter but on a much more modest level relative to the results year to date. These asset classes, in particular high yield bonds offer the most compelling prospects for yield and total return in the Fund. Bank loans, although still attractive on a fundamental basis, are expected to contribute less on a yield basis to the Fund and offer less potential for continued capital appreciation.
Distribution by Credit Quality
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 %
 
        
Diversification by Industry
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

 

The Hartford Income Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Income Fund
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Income Fund
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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  
       
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Income Fund
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.
The accompanying notes are an integral part of these financial statements.

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.
Futures Contracts Outstanding 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.
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Income Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
                                                 
    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.
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford Income Fund
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford Income Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

14

 

The Hartford Income Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

15

 

The Hartford Income Fund
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 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

 

The Hartford Income Fund
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

 

The Hartford Income Fund
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

 

The Hartford Income Fund
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  
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
   $ —     $ 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

 

The Hartford Income Fund
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%
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 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

 

The Hartford Income Fund
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 )
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
     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

 

The Hartford Income Fund
Financial Highlights
- 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
   $ 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

 

- 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)
 
                                                        
 
    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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Income Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian, agent banks, and brokers or by other appropriate auditing procedures where replies from agent banks or brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Income Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

30

 

The Hartford Income Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Income Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

33

 

The Hartford Income Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

34

 

The Hartford Income Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)  
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Income Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Income Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

36

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO. The Board noted Management’s proposal to increase the levels above which expenses will be reimbursed for each share class by 0.05%.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered

37

 

The Hartford Income Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

38

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-23 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Inflation Plus Fund

 

 

The Hartford Inflation Plus Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    4  
 
    6  
 
    7  
 
    8  
 
    9  
 
    10  
 
    22  
 
    24  
 
    25  
 
    27  
 
    27  
 
    28  
 
    29  
 
    30  

 

 

The Hartford Inflation Plus Fund inception 10/31/2002
(subadvised by Hartford Investment Management Company)   Investment objective — Seeks a total return that exceeds the rate of inflation over an economic cycle.
Performance Overview(1) 10/31/02 - 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Barclays Capital U.S. TIPS Index represents securities that protect against adverse inflation and provide a minimum level of real return. To be included in this index, bonds must have cash flows linked to an inflation index, be sovereign issues denominated in U.S. currency, and have more than one year to maturity.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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
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)   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
    
How did the Fund perform?
The Class A shares of The Hartford Inflation Plus Fund returned 17.20%, before sales charge, for the twelve-month period ended October 31, 2009. In comparison, its benchmark, the Barclays Capital U.S. TIPS Index, returned 17.15% while the average return of the Lipper Treasury Inflation Protected Securities peer group, a group of funds with investment strategies similar to those of the Fund, was 16.25%.
Why did the Fund perform this way?
The Consumer Price Index (CPI) headline inflation a year ago this October was at 3.7%. That is in sharp contrast with the negative 1.3% print for September 2009 (the most recent month reporting period). The year to year decline in CPI for September was largely due to a sharp decline in energy prices from one year ago. The energy sub-index of CPI dropped 21.6% over the last twelve-months, as all its major components continued to decline.

2

 

Looking ahead, headline CPI will likely revert back to positive on a year to year basis by the end of 2009. Headline CPI prints are still suffering from a “base effect” caused by extremely high energy prices in the first half of 2008. The low print for headline CPI this year probably already occurred in July when it was negative 2.1%. In contrast to the collapse in energy prices at the end of 2008, prices have trended higher for most of 2009. Crude oil has more than doubled in price since the beginning of the year. Oil tends to garner significant attention in the Treasury Inflation Protected Securities (TIPS) market and is one of the major factors contributing to the recovery in TIPS prices since the end of 2008. In the background of all this is a steady erosion in the value of the U.S. dollar and a steady rise in the price of gold. The combination of all these factors has resulted in a steady recovery in TIPS breakevens (i.e. the spread between nominal yields on Treasuries and the real yield on TIPS). Ten year breakevens, which turned negative at one point in November 2008, recovered all the way to positive 200 basis points by the middle of 2009.
The Fund maintained a high weight (93% plus) to TIPS over the period. Duration (i.e. sensitivity to changes in interest rates) and security selection both detracted from performance over the period but this was more than offset by the positive contribution from positioning along the real yield curve and sector allocation. As the financial crisis accelerated in the 4th quarter of 2008, the Fund’s cash position was increased, and the Fund’s TIPS holdings were shifted further out on the yield curve (i.e. purchasing bonds with a longer maturity date). These changes helped the Fund avoid the significant negative impacts of short real yields rising sharply as commodity prices collapsed at the end of 2008. The negative contribution to performance (primarily in January) from security selection was largely the result of investors purchasing newer TIPS issues with low inflation accruals over older TIPS issues with high accrued inflation. While TIPS issues with low index ratios (i.e. primarily more recently auctioned issues without much accrued inflation) continue to trade richly, the disparity we saw earlier in the year has been dissipating. Our short-term view on inflation indicates no inflationary pressure for at least 12-24 months. As such, the Fund continues to avoid making any allocations to short TIPS (ie. 2yrs and under). Liquidity in the TIPS market has come back significantly from the poor conditions we saw at the end of 2008 and early 2009; however, the market is not back to pre-crisis conditions. As a result the Fund continues to actively manage interest rate risk and the volatility of the basis between TIPs and nominal Treasuries, primarily through the use of financial futures contracts (an exchange traded contract to buy or sell a financial instrument at a certain date in the future).
What is your outlook?
There remains wide spread disagreement between economists about the outlook for inflation. However, the TIPS market seems to be taking its cues from the equity markets and the growing perception that the recession ended in June or July. With the Fed continuing to emphasize that policy will remain accommodative for an “extended period of time,” investors both domestically and overseas have continued to favor TIPS.
The Federal Reserve (the Fed) has tried to reassure the markets that inflation will remain subdued, if for no other reason than to support the U.S. dollar. If the dollar continues to slide on fears of the Fed reflating the economy, it will complicate the Fed’s ability to maintain low rates and simultaneously prevent inflationary expectations from rising.
The combination of rising unemployment, falling wages and global slack will likely keep inflation in check for the foreseeable future. Our greatest concern going forward is the absolute level of real yields. Real yields across the board are historically low. At the end of the quarter, 20 year real yields dipped below 2%. While this is not an all time low, the level is worrisome when considered in the context of extremely low policy rates, a growing budget deficit , the winding down of quantitative easing and an economy that is recovering more quickly than expected.
The concern among investors remains the real possibility of a policy mistake as the economy moves out of recession. When the Fed decides to reverse course, the moves may not be as incremental as in the past. Some Fed governors have even hinted as much in their recent speeches, and if interest rate movements come at a faster pace than they have historically, the market reaction will not be good, particularly in the short end of the yield curve.
On August 5, 2009, the Board of Directors of The Hartford Mutual Funds II, Inc. approved on behalf of The Hartford U.S. Government Securities Fund (“U.S. Government Securities”) and the Board of Directors of The Hartford Mutual Funds, Inc. approved on behalf of The Hartford Inflation Plus Fund (“Inflation Plus”), a Form of Agreement and Plan of Reorganization that provides for the reorganization of U.S. Government Securities, a series of The Hartford Mutual Funds II, Inc., into Inflation Plus, a series of The Hartford Mutual Funds, Inc. (“Reorganization”). The Reorganization does not require shareholder approval. 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.
Distribution by Credit Quality
as of October 31, 2009
         
    Percentage of
    Long Term
Rating   Holdings
AAA
     99.9 %
Not Rated
     0.1  
 
        
Total
     100.0 %
 
        
Diversification by Industry
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

 

The Hartford Inflation Plus Fund
Schedule of Investments
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.
The accompanying notes are an integral part of these financial statements.

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.
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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.
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Inflation Plus Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(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.
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Inflation Plus Fund
Statement of Assets and Liabilities
October 31, 2009
(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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Inflation Plus Fund
Statement of Operations
For the Year Ended October 31, 2009
(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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Inflation Plus Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Inflation Plus Fund
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 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

 

The Hartford Inflation Plus Fund
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.
 
      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

 

The Hartford Inflation Plus Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Inflation Plus Fund
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, 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

 

The Hartford Inflation Plus Fund
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
     0.55 %
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

 

The Hartford Inflation Plus Fund
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

 

The Hartford Inflation Plus Fund
Financial Highlights
- 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
   $ 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

 

- 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)
 
                                                
17.20%
  $ 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Inflation Plus Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian, agent banks, and brokers or by other appropriate auditing procedures where replies from agent banks or brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Inflation Plus Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

24

 

The Hartford Inflation Plus Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Inflation Plus Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

27

 

The Hartford Inflation Plus Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

28

 

The Hartford Inflation Plus Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Inflation Plus Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Inflation Plus Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

30

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and

31

 

The Hartford Inflation Plus Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO. The Board noted Management’s proposal to increase the levels above which expenses will be reimbursed for each share class by 0.05%.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

32

 

The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

33

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-24 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(LOGO)
(GRAPHIC)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford n I ternational Growth Fund

 

The Hartford International Growth Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    5  
 
    8  
 
    9  
 
    10  
 
    11  
 
    12  
 
    24  
 
    26  
 
    27  
 
    29  
 
    29  
 
    30  
 
    31  
 
    32  

 

The Hartford International Growth Fund inception 04/30/2001
(subadvised by Wellington Management Company, LLP)   Investment objective – Seeks capital appreciation.
Performance Overview(1) 4/30/01 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
MSCI EAFE Growth Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance (excluding the U.S. and Canada) of the growth securities within the MSCI EAFE Index.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
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
            
 
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
How did the Fund perform?
The Class A shares of The Hartford International Growth Fund returned 13.15%, before sales charge, for the twelve-month period ended October 31, 2009, underperforming its benchmark, the MSCI EAFE Growth Index, which returned 24.08% for the same period. The Fund also underperformed the 33.16% return of the average fund in the Lipper International Multi-Cap Growth Funds peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
Global equities declined during the first part of the period amid increasing signs of a deeper and more protracted recession and then rebounded dramatically in the second part of the period as governments around the world increased their involvement to help mitigate the financial crisis. Better-than-expected corporate earnings and generally improving economic data boosted investors’ enthusiasm for stocks. Within the MSCI EAFE Growth Index, all sectors posted positive returns during the period. Telecommunication Services

2

 

(55%), Materials (48%), and Industrials (32%) gained the most during the period, while Energy (12%) and Health Care (14%) lagged.
The Fund’s underperformance relative (i.e. performance of the Fund as measured against the benchmark) to the MSCI EAFE Growth Index was the result of weak security selection. Stock selection was weakest in Financials, Materials, and Telecommunications Services. Stock selection in Information Technology was positive. Sector positioning, a residual of bottom-up (i.e. stock by stock fundamental research) stock selection, contributed positively to benchmark-relative results during the period primarily due to the Fund’s overweight (i.e. the Fund’s sector position was greater than the benchmark position) to Telecommunication Services and underweight (i.e. the Fund’s sector position was less than the benchmark position) exposure to Utilities and Financials. The Fund also benefited from a moderate cash position, which helped relative performance as the market trended lower from November through February.
UBS (Financials), BHP Billiton (Materials), and Anglo American (Materials) were the leading detractors from benchmark-relative performance during the period. Shares of Switzerland-based financial services provider UBS moved lower after the firm posted a larger-than-expected quarterly loss in the first quarter of 2009. We exited the position during the period. During the early part of the period, shares of Materials company BHP Billiton outperformed due to its strong cash flow generation and relatively healthy balance sheet. We initiated a position during the period, but not holding the benchmark component stock throughout the entire period detracted from relative performance. Shares of mining company Anglo American declined amid falling metals prices and as the company announced plans to reduce planned investment. We exited the position during the period. Other detractors from the Fund’s absolute (i.e. total return) performance were British private equity firm 3i (Financials) and German insurance company Allianz (Financials).
Top contributors to the Fund’s relative performance were Volkswagen (Consumer Discretionary), Autonomy Group (Information Technology), and Standard Chartered (Financials). The Fund benefited on a relative basis by not holding German car maker Volkswagen, which is a component of the benchmark. The stock continued to fall after the rapid appreciation seen in October 2008, which had been driven by Porsche’s move to take a controlling stake in the company. Leading British software company Autonomy announced better-than-expected earnings, reflecting strong demand for its services and driving shares higher. Shares of U.K.-based bank Standard Chartered rose sharply on a strong earnings report driven by wholesale banking revenues and reassurance that its balance sheet remains solid. Credit Suisse (Financials) and Kingfisher (Consumer Discretionary) also contributed positively to the Fund’s absolute performance.
What is the outlook?
Global economies continued the healing process during the latter part of the period. Our overall positioning is consistent with an improving economic outlook as aggressive stimulus measures have proven effective at providing liquidity and have eased financial market pressures. Against this backdrop, we continue to seek globally competitive growth companies within industries with improving fundamentals.
We select stocks individually based on their merits. Our overall positioning is also consistent with an improving economic outlook. During the period we increased our exposure to the cyclically oriented Industrials and Consumer Discretionary sectors, and decreased our exposure to traditionally defensive Health Care and Consumer Staples. As a result, Industrials was the Fund’s largest absolute weight and largest overweight exposure relative to the benchmark at the end of the period. Other sectors where we ended the period with above benchmark weights included Information Technology and Consumer Discretionary. The Fund held less-than-benchmark weights in the Consumer Staples, Telecommunication Services, and Utilities sectors.
Diversification by Industry
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

 

Diversification by Country
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

 

The Hartford International Growth Fund
Schedule of Investments
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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford International Growth Fund
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

 
•   Currently non-income producing.
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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.
Currency Concentration on Securities at October 31, 2009
         
    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 %
 
        
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford International Growth Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford International Growth Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford International Growth Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford International Growth Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford International Growth Fund
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 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

 

The Hartford International Growth Fund
Notes to Financial Statements – (continued)
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

 

The Hartford International Growth Fund
Notes to Financial Statements – (continued)
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  
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
   $ —     $ —     $ —     $ (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).
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:
         
    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

 

The Hartford International Growth Fund
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
   $ 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

 

The Hartford International Growth Fund
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 $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  
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     $ 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

 

The Hartford International Growth Fund
Notes to Financial Statements – (continued)
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

 

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23

 

The Hartford International Growth Fund
Financial Highlights
- 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
   $ 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

 

- 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)
               
 
                                
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford International Growth Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford International Growth Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

26

 

The Hartford International Growth Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford International Growth Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

29

 

The Hartford International Growth Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
The Fund intends to make an election under the Internal Revenue Code Section 853 to pass-through foreign taxes paid by the Fund to their shareholders in the amount of $704.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

30

 

The Hartford International Growth Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford International Growth Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford International Growth Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

32

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record. The Board considered information indicating that the Fund had underperformed relative to its peers and benchmark for certain periods, and HIFSCO’s initiatives over the course of the year to address performance issues.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets

33

 

The Hartford International Growth Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

34

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(LOGO)
MFAR-25 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

(THE HARTFORD LOGO)
(GRAPHIC)

 

 

The Hartford International Opportunities Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    4  
 
    7  
 
    8  
 
    9  
 
    10  
 
    11  
 
    22  
 
    24  
 
    25  
 
    27  
 
    27  
 
    28  
 
    29  
 
    30  

 

 

The Hartford International Opportunities Fund inception 07/22/1996
(subadvised by Wellington Management Company, LLP)   Investment objective — Seeks long-term 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
(LINE GRAPH)
MSCI All Country World ex U.S. Index is a broad based, unmanaged, market capitalization weighted, total return index that measures the performance of both developed and emerging stock markets, excluding the U.S. The index is calculated to exclude companies and share classes which cannot be freely purchased by foreigners.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
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)   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.
Portfolio Manager
Nicolas M. Choumenkovitch
Senior Vice President, Partner
How did the Fund perform?
The Class A shares of The Hartford International Opportunities Fund returned 26.36%, before sales charge, for the twelve-month period ended October 31, 2009, underperforming its benchmark, the MSCI All Country World ex U.S. Index, which returned 34.79% for the same period. The Fund outperformed the 23.41% return of the average fund in the Lipper International Large-Cap Core Funds peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
Broad global equity markets rose during the period, but this overall increase masks two distinct market environments. From November through early March stocks fell sharply, reflecting deepening economic worries. Beginning in early March stocks rallied through September as investors came to believe that a Depression-like scenario was less likely. All ten sectors within the MSCI All Country World ex U.S. Index had positive returns during the period, with Materials (60%), Financials (40%), and Industrials (40%) gaining the most, while traditionally defensive sectors like Utilities (10%) and Health Care (15%) lagged.
The Fund’s underperformance versus its benchmark was due to weak stock selection. Selection was weakest within Financials, Energy, and Industrials. Allocation among sectors, a result of the bottom-up (i.e. stock

2

 

by stock fundamental research) stock selection process, was slightly negative, largely due to underweight (i.e. the Fund’s sector position was less than the benchmark position) positions in Industrials and Materials, which were among the top-performing sectors of the market.
The largest detractors from relative (i.e. performance of the Fund as measured against the benchmark) returns were UBS (Financials), National Grid (Utilities), and BG Group (Energy). Shares of Swiss financial services provider UBS fell early in the period when the firm posted a larger-than-expected quarterly loss in the first quarter of 2009, due in part to a charge related to the transfer of risky assets to a fund managed by the Swiss National Bank, which was part of a rescue package set up by the Swiss government. U.K. electricity transmission and distribution company National Grid saw its stock decline in the first part of the period due to a weak U.K. economic outlook and falling power demand expectations. Shares of U.K.-based integrated natural gas company BG Group underperformed during the period due to the impact of flat oil prices and declines in gas prices. Significant detractors from absolute (i.e. total return) returns included Japan Tobacco (Consumer Staples), Roche (Health Care), and British Land (Financials).
Top contributors to relative performance during the period included Rio Tinto (Materials), Volkswagen (Consumer Discretionary), and Toronto-Dominion Bank (Financials). Shares of diversified mining company Rio Tinto benefited from rising copper prices and the company’s reduced balance sheet risk following successful debt and rights issues and a planned iron ore joint venture with BHP. The Fund also gained on a relative basis by not holding German car maker Volkswagen, which is a component of the benchmark. The stock continued to fall after the rapid appreciation seen in October 2008, which had been driven by Porsche’s move to take a controlling stake in the company. Shares of Toronto-Dominion, a Canadian-based bank with significant U.S. operations, rose after the company beat consensus expectations citing better-than-expected net interest income and trading profits. Top absolute contributors also included HSBC (Financials).
What is the outlook?
Global economies continued the healing process during the third quarter of 2009. Aggressive stimulus measures proved effective at providing liquidity and significantly eased financial market pressures. The real economy is also showing signs of life; the pace of layoffs is slowing, consumer spending is up, home sales have bounced off their lows and manufacturers are boosting output after excessive production cuts earlier in the year.
Equity markets rallied sharply as they began to discount the turn in economic sentiment. As a result, much of the valuation gap that existed entering the third quarter has narrowed as prices reflect a more balanced risk/reward profile. The Fund continues to be focused on holding leading franchises who will be market share winners in what we believe is likely to be a low growth environment. We have identified a number of these opportunities in the Financials and Consumer Discretionary sectors, and added to those areas recently.
Regional weights continue to reflect bottom up stock selection. During the period we trimmed exposure to U.K. and European holdings and increased positions in select emerging markets stocks, which we believe to be attractive on a number of valuation measures.
Diversification by Industry
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 %
 
        
Diversification by Country
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

 

The Hartford International Opportunities Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford International Opportunities Fund
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.
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford International Opportunities Fund
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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.
Currency Concentration on Securities at October 31, 2009
         
    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 %
 
       
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford International Opportunities Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford International Opportunities Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford International Opportunities Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford International Opportunities Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford International Opportunities Fund
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 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

 

The Hartford International Opportunities Fund
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

 

The Hartford International Opportunities Fund
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
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
   $ —     $ —     $ —     $ (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

 

The Hartford International Opportunities Fund
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).
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:
         
    Amount  
Undistributed Ordinary Income
   $ 2,497  
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

 

The Hartford International Opportunities Fund
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

 

The Hartford International Opportunities Fund
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

 

The Hartford International Opportunities Fund
Financial Highlights
- 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
   $ 10.23     $ 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

 

- Ratios and Supplemental Data -
                                                         
                                    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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford International Opportunities Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford International Opportunities Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

24

 

The Hartford International Opportunities Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee

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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004

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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee

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.
Sandra S. Jaffee (1941) Director since 2005

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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee

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

 

The Hartford International Opportunities Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee

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.
Lemma W. Senbet (1946) Director since 2005

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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee

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.
John C. Walters* (1962) Director since 2008

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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)

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.
Brian Ferrell (1962) AML Compliance Officer since 2008

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. Robert J. Froehlich (1953) Senior Managing Director since 2009

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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006

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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005

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.
Vernon J. Meyer (1964) Vice President since 2006

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.
D. Keith Sloane (1960) Vice President since 2009

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.
Jane Wolak (1961) Vice President since 2009

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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

27

 

The Hartford International Opportunities Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
The Fund intends to make an election under the Internal Revenue Code Section 853 to pass-through foreign taxes paid by the Fund to their shareholders in the amount of $648.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                         
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

28

 

The Hartford International Opportunities Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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  

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The Hartford International Opportunities Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford International Opportunities Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

30

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the

31

 

The Hartford International Opportunities Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.

32

 

The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

33

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(LOGO)
MFAR-26 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(HARTFORD LOGO)
(HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford International Small Company Fund
Table of Contents
         
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.
Performance Overview(1) 4/30/01 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE CHART)
S&P EPAC SmallCap Index, formerly S&P/Citigroup Europe Pacific Asia Composite (EPAC) Extended Market Index (EMI), is a developed-market equity index representing the bottom 15% of the cumulative available capital, by country, of the S&P EPAC Broad Market Index (BMI). The S&P EPAC BMI captures all companies in developed market countries, as defined by Standard & Poor’s, within Europe and the Asia Pacific region. To meet the eligibility criteria, companies must have float-adjusted market capitalizations of at least US$100 million and a trailing 12 month trading volume of at least US$50 million. Companies are removed if their float-adjusted market capitalization falls below US$75 million or if their trailing 12 month trading volume falls below US$35 million during the annual index reconstitution.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(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
How did the Fund perform?
The Class A shares of The Hartford International Small Company Fund returned 43.97%, before sales charge, for the twelve-month period ended October 31, 2009, outperforming its benchmark, the S&P EPAC SmallCap Index, which returned 43.12% for the same period. The Fund outperformed the 41.75% return of the average fund in the Lipper International Small/Mid Cap Core peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
The benchmark’s positive return for the period masks two distinct market environments. From the beginning of November through early March stocks continued to fall sharply, as deleveraging across the financial sector accelerated, limiting the availability of credit to companies in nearly all markets, and exacerbating a slowdown across the real economy. Many investors responded to the financial crisis by shedding risk broadly, increasing exposure to cash, and selling

2

 

equities with little regard for quality or valuation. From early March through the end of October stocks staged a dramatic rally as investors came to believe that a Depression-like scenario was less likely. All sectors within the S&P EPAC SmallCap Index posted double digit returns over the period, with particular strength in Energy (+62%), Materials (+56%), and Information Technology (+54%). Utilities (+24%) and Consumer Staples (+29%) rose the least.
The Fund outperformed its benchmark primarily due to stock selection in the Consumer Discretionary, Energy, and Consumer Staples sectors. Selection was weaker in Materials and Financials sectors. Allocation among sectors, which is largely a result of the bottom-up (i.e. stock by stock fundamental research) stock selection process, was additive due to an overweight (i.e. the Fund’s sector position was greater than the benchmark position) position in Energy and an underweight (i.e. the Fund’s sector position was less than the benchmark position) in Financials. In addition, the small cash position was a drag on performance in an upward trending market.
Top contributors to relative (i.e. performance of the Fund as measured against the benchmark) returns were Dufry Group (Consumer Discretionary), Karoon Gas Australia (Energy), and Shandong Weigao (Health Care). Shares of airport retail shops operator Dufry Group rose during the period as investors gained confidence in management’s ability to operate through the downturn and achieve margin goals despite a slowdown in consumer spending. Shares of Australian energy exploration company Karoon Gas Australia moved higher on news of a successful gas find off Australia’s west coast. Hong Kong-based medical device company Shandong Weigao benefited from a minority investment from Medtronic, boosting its share price. Top absolute (i.e. total return) contributors also included Temenos Group (Information Technology), a Switzerland-based software and services provider to banks.
The largest detractors from relative performance during the period were Spazio Investment (Financials), Aeon Delight (Industrials), and Hampson Industries (Utilities). Shares of Spazio Investment, a Dutch-based real estate company focused on Italy’s industrial real estate market, fell as it appeared that demand for their properties would remain muted. Aeon Delight, a provider of real estate maintenance services in Japan, saw its shares fall after disappointing earnings announcements. Global aerospace tooling company Hampson Industries was negatively impacted by delays and cancellations of aircraft orders, pushing its shares lower. Significant absolute detractors also included German pharmaceutical company Stada Arzneimittel (Health Care).
What is the outlook?
Despite a sharp recovery in equity markets since March, economic data continues to remain weak. Corporations have succeeded in quickly realigning cost structures and preserving margins in the face of significant erosion in end markets; however, continued recovery from here is likely to depend, in part on strong top-line growth. Against this uncertain backdrop, we continue to favor high quality companies with clean balance sheets, solid revenue predictability, and nimble cost structures, where management teams have been able to adapt to changing macro circumstances. We continue to focus on bottom-up stock picking and, despite a broader market recovery, we are finding a number of attractive opportunities.
At the end of the period, we were most overweight in Industrials and Information Technology stocks and most underweight Financials and Materials. On a regional basis, our greatest underweight position relative to the benchmark at the end of the period was in Europe. This was offset by overweight positions in select emerging markets and Asia Pacific ex Japan.
Diversification by Industry
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

 

Diversification by Country
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

 

The Hartford International Small Company Fund
Schedule of Investments
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford International Small Company Fund
Schedule of Investments — (continued)
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  
       
 
            
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford International Small Company Fund
Schedule of Investments
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.
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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.
Currency Concentration on Securities at October 31, 2009
         
    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 %
 
        
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford International Small Company Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford International Small Company Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford International Small Company Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford International Small Company Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford International Small Company Fund
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 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

 

The Hartford International Small Company Fund
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.
 
      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

 

The Hartford International Small Company Fund
Notes to Financial Statements — (continued)
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  
The ratio of forward currency contract market value to net assets as of October 31, 2009, was 2.05%, compared to a monthly twelve-month average ratio of 7.49%
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
   $ —     $ —     $ —     $ (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

 

The Hartford International Small Company Fund
Notes to Financial Statements — (continued)
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

 

The Hartford International Small Company Fund
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 $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  
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
     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

 

The Hartford International Small Company Fund
Financial Highlights
                                                                                         
— 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford International Small Company Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford International Small Company Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

24

 

The Hartford International Small Company Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford International Small Company Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

27

 

The Hartford International Small Company Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
The Fund intends to make an election under the Internal Revenue Code Section 853 to pass-through foreign taxes paid by the Fund to their shareholders in the amount of $229.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

28

 

The Hartford International Small Company Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford International Small Company Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford International Small Company Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

30

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and

31

 

The Hartford International Small Company Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

32

 

The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

33

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(HARTFORD LOGO)
MFAR-27 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(HARTFORD LOGO)
(HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford MidCap Fund
Table of Contents
         
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.
Performance Overview(1) 10/31/99 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
S&P MidCap 400 Index is an unmanaged index of common stocks of companies chosen by S&P designed to represent price movements in the midcap U.S. equity market.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
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)   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.
Portfolio Manager
Phillip H. Perelmuter
Senior Vice President, Partner
How did the Fund perform?
The Class A shares of The Hartford MidCap Fund returned 11.34%, before sales charge, for the twelve-month period ended October 31, 2009, underperforming its benchmark, the S&P MidCap 400 Index, which returned 18.18% for the same period. The Fund also underperformed the 16.57% return of the average fund in the Lipper Mid-Cap Core Funds peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
After posting steep losses in 2008 and the first part of 2009 amid increasing signs of a deeper and more protracted recession, U.S. equities staged a sharp rebound beginning in March as favorable news flow from a few large financial institutions signaled to investors that the troubled Financials sector might be starting to stabilize. Adding fuel to the recovery was encouraging economic data and the U.S. Treasury Department’s updated plan to clean up bank balance sheets. The broad U.S. equity market posted positive returns for the period, aided by the strong rally from the mid-March lows. Mid cap stocks (+18.2%) outperformed small (+6.5%) and large cap stocks (+9.8%) during the period, as measured by the S&P MidCap 400, Russell 2000, and S&P 500

2

 

indices, respectively. Growth stocks (+18.2%) significantly out-paced Value (+8.5%) during the period, as measured by the Russell 2500 MidCap Growth and Russell 2500 MidCap Value indices. Within the S&P MidCap 400 Index, all ten sectors posted positive returns. The Information Technology (+33%), Consumer Discretionary (+32%), and Materials (+26%) sectors outpaced the Financials (+1%), Utilities (+12%), and Consumer Staples (+13%) sectors.
Overall underperformance versus the benchmark was driven by weak security selection, primarily within Consumer Discretionary, Energy, and Health Care. This more than offset stronger positive stock selection within Industrials and Financials. Sector allocations, driven by our bottom-up (i.e. stock by stock fundamental research) stock selection process, contributed to relative (i.e. performance of the Fund as measured against the benchmark) returns during the period, primarily due to an underweight (i.e. the Fund’s sector position was less than the benchmark position) position in the weak-performing Financials sector and overweight (i.e. the Fund’s sector position was greater than the benchmark position) positions in Information Technology and Health Care.
Top detractors from relative performance included Priceline.com (Consumer Discretionary), St. Jude Medical (Health Care), and Aon (Financials). Not holding Priceline.com detracted from benchmark-relative performance. Shares of the global online travel provider rose during the period due to strong earnings and an increase in bookings. Shares of St. Jude Medical, a cardiovascular medical device company, declined after management reduced guidance as a slowdown in hospital stocking of certain medical devices reduced expected sales revenues. Shares of insurance brokerage company Aon declined as the company posted lower-than-expected earnings due to the economic downturn and a softer insurance pricing environment. Kansas City Southern (Industrials), Forest Oil (Energy), and Agrium (Materials) were top detractors from absolute (i.e. total return) performance.
Top contributors to relative and absolute returns included Life Technologies (Health Care), NetApp (Information Technology), and Red Hat (Information Technology). Life Technologies, created through the merger of Invitrogen and Applied Biosystems, is a provider of tools and cultures used in genetic research and drug development. The company’s shares benefited during the period from strong synergies after the merger. Shares of network storage equipment manufacturer NetApp rose as the company walked away from a bidding war with EMC for Data Domain, and improved cost controls drove margin expansion. Open-source enterprise software and services company Red Hat benefited from growing revenue and higher margins as IT organizations moved ahead with purchases of the firm’s high value software solutions.
What is the outlook?
Global economies continued the healing process during the latter part of the period. The rate of increase in unemployment has slowed, industrial production leading indicators are pointing to an expansion, and the housing market has shown some signs of stabilization. The government continues to reshape the financial playing field through stimulus packages, massive loans to impaired private sector companies, and other programs, all taken with an eye towards thawing credit markets and placing a floor on housing price declines and a ceiling on housing inventory. We believe these moves should continue to help mitigate some of the negative economic pressures.
Our efforts are focused on picking stocks based on a bottom-up review of their fundamentals. As a result of these individual stock decisions, we ended the period with our most significant overweight positions relative to the benchmark in the Consumer Discretionary, Information Technology, and Health Care sectors. Our largest underweights relative to the benchmark were in Financials, Materials, and Utilities.
Diversification by Industry
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

 

The Hartford MidCap Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford MidCap Fund
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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.
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford MidCap Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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.
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford MidCap Fund
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford MidCap Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford MidCap Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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)
   $ —     $ —  
 
            
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford MidCap Fund
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 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

 

The Hartford MidCap Fund
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

 

The Hartford MidCap Fund
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  
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
   $ —     $ —     $ —     $ 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

 

The Hartford MidCap Fund
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

 

The Hartford MidCap Fund
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

 

The Hartford MidCap Fund
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

 

The Hartford MidCap Fund
Financial Highlights
                                                                                         
— 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford MidCap Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford MidCap Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

24

 

The Hartford MidCap Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford MidCap Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

27

 

The Hartford MidCap Fund
Federal Tax Information (Unaudited)
The Fund made no capital gain or income distributions for the fiscal year ended October 31, 2009.

28

 

The Hartford MidCap Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford MidCap Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford MidCap Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

30

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the

31

 

The Hartford MidCap Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO. The Board also considered Management’s recommendation to increase the investment sub-advisory fee paid to the Sub-adviser. In this regard, the Board noted that HIFSCO, and not the Fund, would pay the increased fee. In addition, the Board noted HIFSCO’s representations that the decrease in its profitability with respect to the Fund that would result from the increased sub-advisory fee schedule would not impact the level and quality of the service that HIFSCO provides to the Fund and its shareholders.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered

32

 

information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

33

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(HARTFORD LOGO)
MFAR-28 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(HARTFORD LOGO)
(HARTFORD MUTUAL FUNDS LOGO)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford MidCap Growth Fund

 

The Hartford MidCap Growth Fund
Table of Contents
         
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.
Performance Overview(1) 1/01/05 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE CHART)
Russell MidCap Growth Index is an unmanaged index measuring the performance of the mid-cap growth segment of the U.S. equity universe.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                 
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1)   Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC.
 
(3)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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
How did the Fund perform?
The Class A shares of The Hartford MidCap Growth Fund returned 24.01%, before sales charge, for the twelve-month period ended October 31, 2009. In comparison, its benchmark, the Russell Midcap Growth Index, returned 22.48%, while the average return of the Lipper Mid-Cap Growth Funds category, a group of funds with investment strategies similar to those of the Fund, was 17.58%.
Why did the fund perform this way?
The Fund’s outperformance relative (i.e. performance of the Fund as measured against the benchmark) to the benchmark for the twelve-month period was primarily due to security selection within the Industrials and Information Technology sectors. This was despite adverse security selection in the Consumer Discretionary and Energy sectors. Among the largest contributors to relative returns were overweights (i.e. the Fund’s sector position was greater than the benchmark position) in Ashland (Materials), a chemical company as well as CommScope, Inc. (Technology), a network communications company. Although the chemicals industry has struggled during the year, Ashland continues to outperform. The company is benefiting from its water technologies and consumer markets divisions (Valvoline). Technology firm CommScope was a top contributor due to its relative strength in the burgeoning internet connectivity space.
The primary detractors from relative return were overweight positions in both Century Aluminum (Materials), a major player in the aluminum industry, and Massey Energy (Energy), a coal producer. Century Aluminum suffered along with the rest of its

2

 

brethren due to a glut in supply of aluminum that basically bottomed out prices over the past year. Massey Energy underperformed the broader market until just recently. We believe this was due to the substitution effect with oil, as crude prices remained uncharacteristically low throughout much of the past year (low oil prices tend to result in reduced demand for alternatives, such as coal, which is Massey’s primary business).
As of the end of the period, the Fund’s top holdings included overweight positions in NVidia (Technology), a graphics technology company, and Red Hat (Technology), the open-source software giant. NVidia is a top holding due to strong management discipline, as evidenced by a solid commitment to research and development, as well as positive earnings momentum. Red Hat is a top holding due to positive earnings surprises and the company’s ability to efficiently manage working capital.
What is the outlook?
Investor appetite for risk changed dramatically over the course of this reporting period. At the beginning of the period fear dominated the market as high profile companies that were “too big to fail” were failing, and the government was scrambling to keep the financial system functioning. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and S&P 600 Small Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 Index stocks outperformed their higher quality peers.
We believe going forward, investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe still lie ahead of us.
The Fund invests in companies that have compelling stock characteristics versus the Russell Midcap Growth Index. The Fund’s systematic approach weighs 30 fundamental characteristics across four broad categories, including business behavior, management behavior, valuation and investor behavior. This analysis is used to build a broadly diversified portfolio of companies, with sector weightings determined largely by the attractiveness of specific stocks within the Fund’s investment universe. Overall, the Fund tends to invest in financially efficient companies with attractive valuations and strong balance sheets. We believe this approach will yield attractive risk-adjusted returns relative to the Russell Midcap Growth Index over the long term.
At a meeting held on November 5, 2009, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc. (the “Company”) approved a Form of Agreement and Plan of Reorganization (the “Reorganization Agreement”) that provides for the reorganization of The Hartford Select MidCap Value Fund (“Select MidCap Value Fund”), a series of the Company, into The Hartford MidCap Growth Fund (“MidCap Growth Fund”), another series of the Company (the “Reorganization”). 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.
Diversification by Industry
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

 

The Hartford MidCap Growth Fund
Schedule of Investments
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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  
       
 
      
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford MidCap Growth Fund
Schedule of Investments
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.
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford MidCap Growth Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford MidCap Growth Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford MidCap Growth Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford MidCap Growth Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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.
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford MidCap Growth Fund
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 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

 

The Hartford MidCap Growth Fund
Notes to Financial Statements — (continued)
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 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.
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.

12

 

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)   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

 

The Hartford MidCap Growth Fund
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.
  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:
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

15

 

The Hartford MidCap Growth Fund
Notes to Financial Statements — (continued)
October 31, 2009
(000’s Omitted)
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
   $ —     $ 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).
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:
         
    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

 

The Hartford MidCap Growth Fund
Notes to Financial Statements — (continued)
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:
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
   $ 50,248  
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  
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
     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

 

The Hartford MidCap Growth Fund
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:
 
    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

 

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21

 

The Hartford MidCap Growth Fund
Financial Highlights
— 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
   $ 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

 

— 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 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford MidCap Growth Fund (formerly known as The Hartford Select MidCap Growth Fund) (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford MidCap Growth Fund (formerly known as The Hartford Select MidCap Growth Fund) of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

24

 

The Hartford MidCap Growth Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford MidCap Growth Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

27

 

The Hartford MidCap Growth Fund
Federal Tax Information (Unaudited)
The Fund made no capital gain or income distributions for the fiscal year ended October 31, 2009.

28

 

The Hartford MidCap Growth Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford MidCap Growth Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford MidCap Growth Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

30

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record. The Board considered information indicating that the Fund has underperformed relative to its peers or benchmark and the causes of the underperformance. The Board noted HIFSCO’s and the Sub-adviser’s plans to address performance going forward.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.

31

 

The Hartford MidCap Growth Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

32

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(HARTFORD LOGO)
MFAR-30 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(THE HARDFORD LOGO)
(THE HARTFORD MUTUAL FUND LOGO)
THE HARTFORD MUTUAL FUND 2009 Annual Report The Hartford MidCap Value Fund

 

 

The Hartford MidCap Value Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    4  
 
    7  
 
    8  
 
    9  
 
    10  
 
    11  
 
    20  
 
    22  
 
    23  
 
    25  
 
    25  
 
    26  
 
    27  
 
    28  

 

 

The Hartford MidCap Value Fund inception 04/30/2001
(subadvised by Wellington Management Company, LLP)
Investment objective — Seeks long-term capital appreciation.
Performance Overview(1) 4/30/01 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Russell 2500 Value Index is an unmanaged index measuring the performance of those Russell 2500 Index companies with lower price-to-book ratios and lower forecasted growth values.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                         
    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.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1)   Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes.
(2)   The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC.
(3)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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 Manager
James N. Mordy
Senior Vice President, Partner
How did the Fund perform?
The Class A shares of The Hartford MidCap Value Fund returned 28.63%, before sales charge, for the twelve-month period ended October 31, 2009, outperforming its benchmark, the Russell 2500 Value Index, which returned 8.55% for the same period. The Fund also outperformed the 18.99% return of the average fund in the Lipper Mid-Cap Value Fund peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
Following a weak start, the markets posted positive returns for the year ended October 31, 2009. During the latter half of the period, investors rotated back into the cyclical sectors of the equity market and demonstrated a willingness to once again embrace risk, despite continuing softness in demand and high unemployment.
During the period, mid cap stocks (18.2%) outperformed small (6.5%) and large cap stocks (9.8%), as measured by the S&P MidCap 400, Russell 2000 and S&P 500 indices, respectively. Growth stocks (11.3%) outpaced Value stocks (8.6%) during the period, as measured by the Russell 2500 Growth and Russell 2500 Value indices; however, this trend reversed somewhat over the final four months of the period. Within the Russell 2500 Value Index, nine out of ten sectors posted positive returns. Information Technology and Consumer Discretionary were the strongest positive performers. Financials was the only sector to post negative returns during the period.

2

 

The Fund’s relative outperformance as measured against the benchmark was primarily driven by strong stock selection. Stock selection was strongest within the Financials, Consumer Staples and Materials sectors. Overall sector allocation, a result of bottom-up (i.e. stock by stock fundamental research) security selection, contributed positively to relative performance, particularly our underweight (i.e. the Fund’s sector position was less than the benchmark position) position in Financials and overweight (i.e. the Fund’s sector position was greater than the benchmark position) positions in Information Technology, Health Care and Consumer Discretionary.
The largest contributors to absolute (i.e. total return) and benchmark-relative performance included PHH Corp. (Financials), Virgin Media (Consumer Discretionary) and Marine Harvest (Consumer Staples). Shares of PHH, a leading provider of private label mortgage services and commercial fleet vehicle management, rose during the period due to a recovery in mortgage volumes and some resolution of funding issues within fleet management. Virgin Media is a U.K. cable television operator whose share price rose due to improved fundamentals. The company now enjoys a favorable pricing environment and technology advantage versus its competitors. Salmon farming company Marine Harvest’s shares moved significantly higher as the global supply-demand balance tightened and fish prices increased. In addition, Wall Street’s concerns that the company would need to raise equity to repay debt abated as interest coverage metrics improved. We held positions in these three stocks at the end of the period.
The largest detractors from absolute and relative returns included Delta Air Lines (Industrials), Popular (Financials) and Newell Rubbermaid (Consumer Staples). Shares of Delta fell as demand for air travel declined even faster than aggressive industry capacity cuts, while a decline in high-fare business travel also affected revenue-per-seat metrics. Shares of Popular, the largest bank in Puerto Rico, declined due to increasing credit losses brought on by the economic recession. Shares of global consumer products company Newell Rubbermaid, which we sold last spring, declined due to a disappointing sales outlook, two dividend cuts, and a dilutive convertible offering to restructure the company’s debt maturities.
What is the outlook?
We believe the global recovery is underway, driven by unprecedented synchronized economic stimulus. Financial market pressures have eased, manufacturers are boosting output after excessive production cuts earlier in the year, consumer spending is perking up, housing is stabilizing, and employment is falling at a slower pace. We believe corporate productivity should remain robust and fuel increased profitability. We estimate that U.S. GDP can expand at a 3-4% pace over the balance of 2009, before settling back to 2-3% for 2010. While we believe job growth could surprise positively in early 2010 and the Fed is unlikely to raise the discount rate anytime soon, we are conscious of several headwinds going forward. Nonresidential construction remains weak, state and local government budgets are stressed, financial and consumer deleveraging will continue, and the Federal Reserve (Fed) will likely stop purchasing Treasuries and mortgages over the next several months, which should lead to some increase in rates.
We ended the period roughly neutral relative to the benchmark in our weighting of the more cyclical sectors. As of October 31, 2009, the Fund was most overweight in the Information Technology, Health Care and Materials sectors, and most underweight in the Financials (REITs in particular), Utilities and Industrials sectors. During the period, we reduced our underweight position to Financials, as government action has provided some level of support to valuations. We also trimmed our overweight in Health Care, a sector that worked well through the downturn but now faces, at a minimum, increased headline risk. On the consumer front, we went from underweight to overweight in Consumer Discretionary, a sector that seemed oversold to us, particularly as we anticipated some stabilization in retail and housing.
Diversification by Industry
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

 

The Hartford MidCap Value Fund
Schedule of Investments
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford MidCap Value Fund
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
                         
Period   Shares/        
Acquired   Par  
Security
   Cost Basis
 
  03/2007       182    
Solar Cayman Ltd. — 144A
   $ 2,425  
The aggregate value of these securities at October 31, 2009 was $5,604 which represents 3.09% of total net assets.
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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.
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford MidCap Value Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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.
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford MidCap Value Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford MidCap Value Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford MidCap Value Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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     $ —  
 
            
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford MidCap Value Fund
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 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

 

The Hartford MidCap Value Fund
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.
 
      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

 

The Hartford MidCap Value Fund
Notes to Financial Statements — (continued)
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

 

The Hartford MidCap Value Fund
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
   $ 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

 

The Hartford MidCap Value Fund
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 $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:
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
   $ 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

 

The Hartford MidCap Value Fund
Financial Highlights
- 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
   $ 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

 

- 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)
                                                     
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford MidCap Value Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford MidCap Value Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

22

 

The Hartford MidCap Value Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford MidCap Value Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

25

 

The Hartford MidCap Value Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

26

 

The Hartford MidCap Value Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                         
    Actual return   Hypothetical (5% return before expenses)                
                    Expenses paid                   Expenses paid           Days in    
                    during the period                   during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford MidCap Value Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford MidCap Value Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

28

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO. The Board also considered Management’s recommendation to increase the investment sub-advisory fee paid to the Sub-adviser. In this regard, the Board noted that HIFSCO, and not the Fund, would pay the increased fee. In addition, the Board noted HIFSCO’s representations that the decrease in its profitability with respect to the Fund that would result from the increased sub-advisory fee schedule would not impact the level and quality of the service that HIFSCO provides to the Fund and its shareholders.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.

29

 

The Hartford MidCap Value Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

30

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-29 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Money Market Fund

 

 

The Hartford Money Market Fund
Table of Contents
         
Financial Statements
        
 
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The Hartford Money Market Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

2

 

The Hartford Money Market Fund
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

3

 

The Hartford Money Market Fund
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Money Market Fund
Investment Valuation Hierarchy Level Summary
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     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Money Market Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Money Market Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Money Market Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Money Market Fund
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 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

 

The Hartford Money Market Fund
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

 

The Hartford Money Market Fund
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

 

The Hartford Money Market Fund
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

 

The Hartford Money Market Fund
Financial Highlights
- 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
   $ 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

 

- 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)
                                                 
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Money Market Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Money Market Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Money Market Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Money Market Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

21

 

The Hartford Money Market Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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.
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Money Market Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Money Market Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Money Market Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

24

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and, a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets

25

 

The Hartford Money Market Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

26

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-31 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Select MidCap Value Fund

 

 

The Hartford Select MidCap Value Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    4  
 
    7  
 
    8  
 
    9  
 
    10  
 
    11  
 
    22  
 
    24  
 
    25  
 
    27  
 
    27  
 
    28  
 
    29  
 
    30  

 

 

The Hartford Select MidCap Value Fund inception 04/29/2005
(subadvised by Hartford Investment Management Company)   Investment objective — Seeks long-term capital appreciation.
Performance Overview(1) 4/29/05 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Russell MidCap Value Index measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth rate. These stocks are also members of the Russell 1000 Value Index.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                 
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
 
(1)   Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC.
 
(3)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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
How did the Fund perform?
The Class A shares of The Hartford Select MidCap Value Fund returned 16.60%, before sales charge, for the twelve-month period ended October 31, 2009. In comparison, its benchmark, the Russell Midcap Value Index, returned 14.52% while the average return of the Lipper Mid-Cap Value Funds category, a group of funds with investment strategies similar to those of the Fund, was 18.99%.
Why did the Fund perform this way?
From November through early March, the Fund’s performance was primarily driven by positive security selection, especially in the Consumer Discretionary sector. After March 9th a low-profitability, low-quality stock rally led the market out of the bottom. This rally impacted the Fund’s performance since it seeks to invest only in high-quality, profitable stocks. As a result, security selection was a detractor for the remainder of the period. However, the effects of security selection were mitigated by positive sector allocation which benefited the Fund’s performance.
Among the largest contributors to relative(i.e. performance of the Fund as measured against the benchmark) performance were overweight (i.e. the Fund’s sector position was greater than the benchmark position) allocations to XL Capital (Financials) and Jones Apparel (Consumer Discretionary). XL Capital rose following the U.S. Department of the Treasury’s announcement of a plan to buy ‘bad assets’ from banks and other financial institutions. Jones Apparel rose after reporting first quarter results

2

 

that were viewed favorably given the difficult economic environment.
Among the largest detractors from relative performance were overweight allocations to Huntington Bancshares (Financials) and Lexmark International (Information Technology). Huntington Bancshares dropped as investors continued to be concerned about issues related to Franklin Credit, a subprime mortgage lender the company acquired in 2007. Lexmark declined after it reported that first quarter profits had fallen and that it would need to cut more jobs and close plants due to declining demand.
What is the outlook?
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. In March investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter. Within equities investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and S&P 600 Small Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 Index stocks outperformed their higher quality peers.
We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
The Fund invests in companies that have compelling stock characteristics versus the Russell Midcap Value Index. The Fund’s systematic approach weighs more than 80 fundamental characteristics across four broad categories, including business behavior, management behavior, valuation and investor behavior. This analysis is used to build a broadly diversified portfolio of companies, with sector weightings determined largely by the attractiveness of specific stocks within the Fund’s investment universe. We believe this approach will yield attractive risk-adjusted returns relative to the Russell Midcap Value Index over the long term.
At a meeting held on November 5, 2009, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc. (the “Company”) approved a Form of Agreement and Plan of Reorganization (the “Reorganization Agreement”) that provides for the reorganization of The Hartford Select MidCap Value Fund (“Select MidCap Value Fund”), a series of the Company, into The Hartford MidCap Growth Fund (“MidCap Growth Fund”), another series of the Company (the “Reorganization”). 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.
Diversification by Industry
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

 

The Hartford Select MidCap Value Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Select MidCap Value Fund
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.
Futures Contracts Outstanding 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.
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Select MidCap Value Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Select MidCap Value Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Select MidCap Value Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Select MidCap Value Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford Select MidCap Value Fund
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 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

 

The Hartford Select MidCap Value Fund
Notes to Financial Statements — (continued)
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.
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:
  •   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

 

The Hartford Select MidCap Value Fund
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  
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
   $ —     $ —     $ (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

 

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.
 
      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

 

The Hartford Select MidCap Value Fund
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).
As of October 31, 2009, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:
         
    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

 

The Hartford Select MidCap Value Fund
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
     1.11 %     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:
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
   $ 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 )
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     $ 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

 

The Hartford Select MidCap Value Fund
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

 

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21

 

The Hartford Select MidCap Value Fund
Financial Highlights
- 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
   $ 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

 

 
 
- 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 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Select MidCap Value Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Select MidCap Value Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

24

 

The Hartford Select MidCap Value Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee

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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004

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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee

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.
Sandra S. Jaffee (1941) Director since 2005

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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee

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

 

The Hartford Select MidCap Value Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee

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.
Lemma W. Senbet (1946) Director since 2005

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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee

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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)

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.
Brian Ferrell (1962) AML Compliance Officer since 2008

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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006

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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005

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.
Vernon J. Meyer (1964) Vice President since 2006

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.
D. Keith Sloane (1960) Vice President since 2009

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.
Jane Wolak (1961) Vice President since 2009

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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

27

 

The Hartford Select MidCap Value Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

28

 

The Hartford Select MidCap Value Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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  

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The Hartford Select MidCap Value Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Select MidCap Value Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

30

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record. The Board considered information indicating that the Fund had underperformed relative to its peers and benchmark for certain periods, and HIFSCO’s initiatives over the course of the year to address performance issues.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.

31

 

The Hartford Select MidCap Value Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality

32

 

services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

33

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-32 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(HARTFORD LOGO)
(IMAGE)

 

The Hartford Select SmallCap Value Fund
Table of Contents
         
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.    
Performance Overview(1) 7/31/06 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
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
Russell 2000 Value Index is an unmanaged index measuring the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                 
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1)   Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC.
 
(3)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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
        
How did the fund perform?
The Class A shares of The Hartford Select SmallCap Value Fund returned 8.28%, before sales charge, for the twelve-month period ended October 31, 2009, outperforming the 1.96% return of the Russell 2000 Value Index and underperforming the 11.52% return of the average fund in the Lipper Small-Cap Value peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
The twelve-month period ended October 31, 2009, was one of the most volatile in history, reflecting investors’ fluctuating reactions to economic data releases and the U.S. government’s involvement to help mitigate the financial crisis. The broad U.S. equity market continued to decline until the early March lows, when it began to sharply rebound all the way through mid October. Within the Russell

2

 

2000 Value Index, there was a wide spread of returns in the various sectors. Seven out of ten sectors posted positive returns for the period, led by Materials (35.2%), Information Technology (30.4%) and Consumer Discretionary (26.2%). The Financials (-14.2%) and Energy (-8.6%) sectors declined the most for the period.
Stock selection was the primary driver of the Fund’s performance relative to the benchmark during the period. World Fuel Services Corporation (Energy), Tempur-Pedic International (Consumer Discretionary) and VeriFone Holdings (Information Technology) were top relative (i.e. performance of the Fund as measured against the benchmark) performers. World Fuel Services, a company involved in the marketing and sale of marine, aviation, and land fuel products, reported strong earnings throughout the period. This was largely driven by its acquisitions of Texor Petroleum Company in June 2008 and two fuel distribution businesses, Henty Oil Group and TGS Petroleum, Inc. in early 2009. World Fuel Services also recently announced a two for one stock split. Tempur-Pedic, which was one of our worst performers in 2008, boosted its gross margin and beat analysts’ expectations during the period due to lower costs and declining selling and marketing expenses, this in response to reduced consumer discretionary spending. A producer of point-of-sale scanners, VeriFone Holdings had sold off excessively toward the end of 2008 in conjunction with the retail slowdown. VeriFone remains the global leader in its business, is generating strong cash flow and stands to benefit over the coming years from growth of non-cash payment methods (credit and debit cards) and the proliferation of new products, from point-of-sale terminals in cabs to handheld scanners in restaurants. From its low in December 2008 to the end of October 2009, shares of VeriFone have gained over 300%.
Detractors from performance included Cathay General Bancorp (Financials) and Zions Bancorp (Financials). Regional banks Cathay General and Zions both decreased on concerns over commercial real estate losses and their balance sheets caused by the challenging financial credit conditions.
What is the outlook?
The worst of the economic pain is likely behind us as the massive policy response from the U.S. Treasury Department and the Federal Reserve has led to an improved credit environment, although not yet a completely healthy one. We believe the full impact of the U.S. government stimulus program will take hold gradually and, while economic growth will turn positive, we expect it to be slower than normal over the next few years. Equity markets could do well in this environment. Slow, steady growth accompanied by relatively low and non-volatile interest rates could be positive for corporate earnings. We also believe that equity returns should beat most fixed income alternatives as investors begin to reinvest their low-yielding cash positions in the stock market.
Currently, the Fund’s overweight positions (i.e. the Fund’s sector position was greater than the benchmark position) relative to the benchmark were in Industrials and Health Care. Conversely, the Fund’s largest underweight position (i.e. the Fund’s sector position was less than the benchmark position) relative to the benchmark continues to be in Financials. We believe that the complementary style of the three sub-advisers provides the Fund with a well positioned portfolio in this environment to add value relative to the market and its peers.
At October 31, 2009, 33% of the Fund’s assets were managed by Kayne Anderson Rudnick Investment Management, 35% were managed by Metropolitan West Capital Management and 32% were managed by SSgA Funds Management.
Diversification by Industry
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 %
 
        

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The Hartford Select SmallCap Value Fund
Schedule of Investments
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  
The accompanying notes are an integral part of these financial statements.

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  
       
 
     
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Select SmallCap Value Fund
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  
       
 
     
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Select SmallCap Value Fund
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  
The accompanying notes are an integral part of these financial statements.

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
       
 
     
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Select SmallCap Value Fund
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  
The aggregate value of these securities at October 31, 2009 was $421 which represents 0.50% of total net assets.
Futures Contracts Outstanding at October 31, 2009
                         
                    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.
Cash of $36 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.
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford Select SmallCap Value Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Select SmallCap Value Fund
Statement of Assets and Liabilities
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.
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford Select SmallCap Value Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford Select SmallCap Value Fund
Statement of Changes in Net Assets
(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  
 
            
The accompanying notes are an integral part of these financial statements.

14

 

The Hartford Select SmallCap Value Fund
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 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

 

The Hartford Select SmallCap Value Fund
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

 

The Hartford Select SmallCap Value Fund
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

 

The Hartford Select SmallCap Value Fund
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

 

The Hartford Select SmallCap Value Fund
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

 

The Hartford Select SmallCap Value Fund
Financial Highlights
                                                                                         
- 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Select SmallCap Value Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Select SmallCap Value Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)          
Minneapolis, MN
December 15, 2009

26

 

The Hartford Select SmallCap Value Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong* (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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

 

The Hartford Select SmallCap Value Fund
Directors and Officers (Unaudited) – (continued)
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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.
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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

 

Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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.
Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

29

 

The Hartford Select SmallCap Value Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

30

 

The Hartford Select SmallCap Value Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Select SmallCap Value Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Select SmallCap Value Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-advisers Kayne Anderson Rudnick Investment Management, LLC, Metropolitan West Capital Management, LLC, and SSgA Funds Management, Inc. (together the “Sub-advisers,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-advisers. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-advisers, who provide day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-advisers’ other investment personnel, their investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-advisers’ method for compensating the portfolio managers.

32

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-advisers.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-advisers’ overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-advisers.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-advisers, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-advisers relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because

33

 

The Hartford Select SmallCap Value Fund
Approval of Investment Management and Investment Sub-Advisory Agreements – (continued)
additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-advisers from their use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-advisers that the Sub-advisers would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.
* * * *

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-33 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUND LOGO)

 

 

The Hartford Short Duration Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    5  
 
    12  
 
    13  
 
    14  
 
    15  
 
    16  
 
    24  
 
    26  
 
    27  
 
    29  
 
    29  
 
    30  
 
    31  
 
    32  

 

 

The Hartford Short Duration Fund inception 10/31/2002
(subadvised by Hartford Investment Management Company)   Investment objective — Seeks to provide a high level of income.
     
Performance Overview(1) 10/31/02 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(PERFORMANCE GRAPH)
Barclays Capital 1-3 Year U.S. Government/Credit Index is an unmanaged index comprised of the U.S. Government/Credit component of the U.S. Aggregate Index. The 1-3 Year Government/Credit Index includes securities in the 1-3 year maturity range in the Government/Credit Index.
Barclays Capital 1-5 Year U.S. Government/Credit Index is an unmanaged index comprised of the U.S. Government/Credit component of the U.S. Aggregate Index. The 1-5 Year Government/Credit Index includes securities in the 1-5 year maturity range in the Government/Credit Index.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1)   Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC.
 
(3)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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
How did the Fund perform?
The Class A shares of The Hartford Short Duration Fund returned 8.23%, before sales charge, for the twelve-month period ended October 31, 2009. In comparison, its benchmark, Barclays Capital 1-3 Year U.S. Government/Credit Index returned 6.31%, while the average return of the Lipper Short Investment Grade Debt Funds category, a group of funds with investment strategies similar to those of the Fund, was 7.67%.

2

 

Why did the Fund perform this way?
Over the past year, signs that the global economy was beginning to improve were apparent across many regions. The ongoing decisions on the part of global central banks to maintain accommodative monetary policy and to expand their balance sheets continue to nurture the willingness of investors to commit capital into riskier asset classes. Against this backdrop, spread sectors (i.e. issues yielding more than Treasuries) in the front end of the yield curve (1-3 yrs), particularly investment grade credit and asset backed securities (ABS), recovered and significantly outperformed Treasuries. This continues to be a theme as liquidity and confidence continue to improve, and investors in search of higher income allocate out of money market funds into the aforementioned spread sectors.
The primary driver of the Fund’s outperformance over the period relative (i.e. performance of the Fund as measured against the benchmark) to the benchmark was sector allocation. An overweight (i.e. the Fund’s sector position was greater than the benchmark position) to Investment Grade Corporates and an out of benchmark allocation to ABS were additive to performance. In terms of security selection, the actual securities chosen in Investment Grade Corporates underperformed the benchmark, but this was more than offset by the overweight allocation to the sector.
Out of benchmark allocations to Commercial Mortgage Backed Securities (CMBS) and an allocation to cash detracted moderately from performance. Duration (i.e. sensitivity to changes in interest rates) and curve positioning relative to the benchmark also detracted slightly from performance. This was a result of the shorter interest rate position than that of the benchmark, due to the cash allocation and source of more attractive yield opportunities in the shorter part of the curve. The duration position has been less of a factor more recently as rates have stabilized.
A relative underweight (i.e. the Fund’s sector position was less than the benchmark position) to the Government sectors such as U.S. Treasuries and Agencies was also additive to relative performance. This relative underweight as well as the Fund’s allocations to Investment Grade Corporates, ABS and CMBS remains the primary drivers of the Fund’s yield.
What is your outlook?
Ongoing government efforts have sufficiently kept the economy moving but this has its limits. Eventually the consumer will need to drive growth again but it is doubtful that capacity and willingness to consume will be as high as it was during the middle part of this decade. Although we may experience a bit of an above trend rebound in coming quarters, our longer term outlook is more conservative.
Due to these concerns we expect the Federal Reserve, and other Global Central Banks to continue to pursue any, and all, policies to ensure that the economy is on the path to recovery. This accommodative monetary policy should result in low yields in the front end of the curve for the foreseeable future. As such we will judiciously continue to look for opportunities to add to spread sectors, primarily Investment Grade Corporates and CMBS, in an effort to preserve yield. With respect to spread sectors, we will focus on those issuers whose balance sheets and cash flow best protect bondholder interest. Diversification will also remain an important theme.
We will continue to actively manage interest rate duration, and may look to add to duration as conditions warrant. Our longer term outlook is for interest rates to move higher, from these historically low levels, so we will be monitoring duration very closely.
Distribution by Credit Quality
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

 

Diversification by Industry
as of October 31, 2009
         
    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

 

The Hartford Short Duration Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Short Duration Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Short Duration Fund
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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  
       
 
      
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Short Duration Fund
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 )
 
      
The accompanying notes are an integral part of these financial statements.

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  
The aggregate value of these securities at October 31, 2009 was $8,649 which represents 3.07% of total net assets.
 
╪   See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Short Duration Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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).
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford Short Duration Fund
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford Short Duration Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

14

 

The Hartford Short Duration Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

15

 

The Hartford Short Duration Fund
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 Short Duration Fund (the “Fund”), a series of the Company, are included in this report.
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company.
Class A shares are sold with a front-end sales charge of up to 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 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 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.
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)   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

 

The Hartford Short Duration Fund
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.
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
   $ 7,449     $ 8,250  

19

 

The Hartford Short Duration Fund
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
   $ 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.
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
     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

 

The Hartford Short Duration Fund
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.
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
   $ 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  
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
     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  
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.

23

 

The Hartford Short Duration Fund
Financial Highlights
- 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
   $ 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

 

- 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)
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Short Duration Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Short Duration Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(SIGNATURE)
Minneapolis, MN
December 15, 2009

26

 

The Hartford Short Duration Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee

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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004

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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee

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.
Sandra S. Jaffee (1941) Director since 2005

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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee

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

 

The Hartford Short Duration Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee

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.
Lemma W. Senbet (1946) Director since 2005

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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee

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.
John C. Walters* (1962) Director since 2008

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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)

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.
Brian Ferrell (1962) AML Compliance Officer since 2008

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. Robert J. Froehlich (1953) Senior Managing Director since 2009

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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006

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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005

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.
Vernon J. Meyer (1964) Vice President since 2006

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.
D. Keith Sloane (1960) Vice President since 2009

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.
Jane Wolak (1961) Vice President since 2009

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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

29

 

The Hartford Short Duration Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

30

 

The Hartford Short Duration Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Short Duration Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Short Duration Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

32

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and

33

 

The Hartford Short Duration Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

34

 

The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

35

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-34 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUL FUND LOGO)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Small Company Fund

 

 

The Hartford Small Company Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
 
Financial Statements
        
 
    4  
 
    9  
 
    10  
 
    11  
 
    12  
 
    13  
 
    26  
 
    28  
 
    29  
 
    31  
 
    31  
 
    32  
 
    33  
 
    34  

 

 

The Hartford Small Company Fund inception 07/22/1996
(subadvised by Wellington Management Company, LLP
Hartford Investment Management Company)
   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
(PERFORMANCE GRAPH)
Russell 2000 Growth Index is an unmanaged index of those Russell 2000 Index growth companies with higher price-to-book ratios and higher forecasted growth values.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
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
        
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
How did the Fund perform?
The Class A shares of The Hartford Small Company Fund returned 6.19%, before sales charge, for the twelve-month period ended October 31, 2009, underperforming its benchmark, the Russell 2000 Growth Index which returned 11.34% for the same period. The Fund also underperformed the 13.14% return of the average fund in the Lipper Small Cap Growth Funds peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
The twelve-month period ended October 31, 2009, was one of the most volatile in history, reflecting investors’ fluctuating reactions to economic data releases and the U.S. government’s involvement to help mitigate the financial crisis. The broad U.S. equity market continued to decline until the early March lows, when it began to sharply rebound all the way through mid October. In this environment, small cap, mid cap and large cap stocks all registered a positive return over the twelve-month period, as

2

 

measured by the Russell 2000 (+6.4%), S&P MidCap 400 (+18.2%) and S&P 500 (+9.8%) indices, respectively. Seven of ten sectors within the Russell 2000 Growth index advanced during the period. Consumer Discretionary (+31.7%), Information Technology (+30.0%), and Utilities (+16.6%) were the strongest-performing sectors while Industrials (-5.2%), Financials (-4.5%), and Energy (-4.1%) declined the most.
From mid-March, a low-profitability, low-quality stock rally led the market out of the bottom. This rally impacted the Fund’s performance since a large portion of the Fund only invests in high-quality, profitable stocks. As a result, the Fund security selection detracted from performance for the remainder of the period. However, the effects of security selection were slightly mitigated by positive stock selection in Industrials and Financials. In particular, an overweight (i.e. the Fund’s sector position was greater than the benchmark position) position in Consumer Discretionary and an underweight (i.e. the Fund’s sector position was less than the benchmark position) in Energy also were additive to relative (i.e. performance of the Fund as measured against the benchmark) performance.
Stocks that detracted the most from relative returns during the period were Solutia (Materials) and Human Genome Science (Health Care). Shares of specialty chemical producer Solutia declined amid heightened anxiety over the company’s debt levels and exposure to automotive- and construction-related end markets. The Fund eliminated the position during the period. Shares of Human Genome Science, a biotechnology company, declined due to a loss in confidence in its Hepatitis C drug and concerns of a delay in its anthrax vaccine program. The Fund eliminated the position early in the period. Significant detractors from absolute (i.e. total return) returns included Penn Virginia (Energy) and Ubisoft Entertainment (Information Technology).
Top contributors to relative performance during the period included Aecom Technology (Industrials), SeaGate Technology (Information Technology), and Red Hat (Information Technology). Shares of Aecom Technology, which provides infrastructure planning, consulting, design, and program and construction management services, rose as the company’s earnings exceeded expectations. The Fund sold into strength, eliminating our position during the period. The Fund established a position in hard drive maker SeaGate Technology early in the period anticipating better industry fundamentals (capacity reduction and low inventories), company-specific execution (new management, restructuring steps and product mix changes). SeaGate’s stock price moved higher as the company reported earnings that topped consensus forecasts. Red Hat’s shares rose as it posted better-than-expected results on growing revenue, climbing market share, and higher margins in a tight information technology spending environment. Significant contributors to absolute returns included Starent Networks (Information Technology) and Jabil Circuit Inc. (Information Technology).
What is the outlook?
The first half of the period was characterized by tremendous uncertainty that undermined confidence and plummeting stock prices. Signs of lessening deterioration in early spring had a powerful positive influence on sentiment and stock prices. Reported corporate profits began to exceed expectations, in large part due to cost cutting. Lean inventories hold up the promise for some uptick in industrial activity while easy year-on-year comparisons could pave the way for better “growth” headlines. Meanwhile, stocks have moved decisively higher: the Russell 2000 Growth Index is now up over 70% since early March. The question now is how sustainable the improvement in fundamentals and sentiment will prove.
Despite the uncertainty, the Fund continues to focus on stocks of companies that have unique business models or special market opportunities that should allow them to deliver superior growth. The Fund remains well diversified, with holdings across all major market sectors. At the end of the period, the Fund had overweights in Consumer Discretionary, Materials, and Consumer Staples relative to the Russell 2000 Growth Index. The Fund ended the period most underweight Health Care, Information Technology, and Financials.
At October 31, 2009, 59% of the Fund’s assets were managed by Wellington Management Company, LLP and 41% of the assets were managed by Hartford Investment Management Company.
Diversification by Industry
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

 

The Hartford Small Company Fund
Schedule of Investments
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Small Company Fund
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  
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Small Company Fund
Schedule of Investments — (continued)
October 31, 2009
(000’s Omitted)
□   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)  
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.
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Small Company Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Small Company Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

10

 

The Hartford Small Company Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Small Company Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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 )   $ —  
 
            
The accompanying notes are an integral part of these financial statements.

12

 

The Hartford Small Company Fund
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 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

 

The Hartford Small Company Fund
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.
 
      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

 

The Hartford Small Company Fund
Notes to Financial Statements — (continued)
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”) 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  
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.

17

 

The Hartford Small Company Fund
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

 

The Hartford Small Company Fund
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

 

The Hartford Small Company Fund
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

 

The Hartford Small Company Fund
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

 

The Hartford Small Company Fund
Financial Highlights
                                                                                         
- 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Small Company Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Small Company Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

28

 

The Hartford Small Company Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford Small Company Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
     Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

31

 

The Hartford Small Company Fund
Federal Tax Information (Unaudited)
The Fund made no capital gain or income distributions for the fiscal year ended October 31, 2009.

32

 

The Hartford Small Company Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Small Company Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Small Company Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreements between HIFSCO and the Fund’s sub-advisers Wellington Management Company, LLP (“Wellington”) and Hartford Investment Management Company (“HIMCO”, together with Wellington, “Sub-advisers” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year, and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board, and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act. With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-advisers. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-advisers, who provide day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-advisers’ other investment personnel, their investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-advisers’ method for compensating the portfolio managers.

34

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-advisers.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-advisers’ overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of Wellington. With respect to HIMCO, the Board noted that the fees payable to HIMCO are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for HIMCO and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-advisers, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-advisers relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered

35

 

The Hartford Small Company Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to Wellington from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and Wellington that Wellington would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates. With respect to HIMCO, the Board considered any benefits to HIMCO from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

36

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-36 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

(THE HARTFORD LOGO)

 

 

The Hartford Strategic Income Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
Financial Statements
        
    5  
    14  
    15  
    16  
    17  
    18  
    30  
    32  
    33  
    35  
    35  
    36  
    37  
    38  

 

 

The Hartford Strategic Income Fund inception 05/31/2007
     
(subadvised by Hartford Investment Management Company)
   Investment objective — Seeks a high level of current income.
 
   Capital appreciation is a secondary objective.
Performance Overview(1) 5/31/07 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                 
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
 
(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
        
How did the Fund perform?
The Class A shares of The Hartford Strategic Income Fund returned 26.24%, before sales charge, for the twelve-month period ended October 31, 2009. In comparison, its benchmark, the Barclays Capital U.S. Aggregate Bond Index, returned 13.79%, while the average return of the Lipper Multi-Sector Income Funds category, a group of funds with investment strategies similar to those of the Fund, was 27.87%.
Why did the Fund perform this way?
The twelve-month period ending October 31, 2009, had three phases. The last two months of 2008 were marked by continued broad weakness in asset prices. The first quarter of 2009 was unique for the recovery in industrial debt spreads across the rating spectrum, but weakness continued in equities, commercial real estate and bank and finance company debt. The third phase began mid March with the recovery of equities and was perpetuated by the expansion of Term Asset-Backed Securities Loan Facility (TALF), the initiation of the Public-Private Investment Program (PPIP) and the successful results of the U.S. Department of the Treasury’s bank stress tests. Since the early part of second quarter 2009 all fixed income spread sectors (i.e. issues yielding more than Treasuries) have

2

 

experienced spread tightening (i.e. short and long term interest rates moving closer together) and significant outperformance versus like maturity Treasuries.
The Fund began the year overweight (i.e. the Fund’s sector position was greater than the benchmark position) spread sectors such as Investment Grade and High Yield Corporate debt and subsequently added to those overweights as confidence was restored to the financial markets. It was this overweight to spread product and well timed expansion of the overweight that led to benchmark outperformance over the period.
The Fund maintained sizeable allocations to non-investment grade securities throughout the period. Specifically, the Fund had an average allocation to High Yield Corporate Bonds of 25% throughout the year. In addition, the Fund averaged a 9% allocation to Bank Loans. These sectors returned 48.0% and 32.7% for the twelve-month period as measured by the Barclays Capital U.S. Corporate High Yield Bond Index and the Barclay’s High Yield Bank Loan indices, respectively.
The Fund also had a benchmark overweight to investment grade credit throughout the period. The bulk of the overweight was expressed in the Industrial sector. This average overweight to the asset class contributed positively to benchmark outperformance. The Fund was underweight (i.e. the Fund’s sector position was less than the benchmark position) the benchmark in Treasuries, Mortgage Backed Securities (MBS) and Agencies. Although Agencies and MBS had positive returns over the period, those returns significantly lagged those of the previously mentioned sectors.
Yield curve and duration (i.e. sensitivity to changes in interest rates) exposure was applied tactically throughout the period but very little performance can be attributed to this positioning. This was due to the fact that the Fund had intermittent periods of both positive and negative contributions from yield curve / duration, in essence canceling each other out.
What is Your Outlook?
Our view of the yield curve is consistent with low growth and low inflation. We expect yields to remain in their current ranges across the curve (ten year range 3.2%-3.8%). Longer maturities will continue to experience volatility with supply pressure, inflation concerns, dollar policy concerns and weak growth but will likely remain in a range as well. We think the shape of the short end (three month-three years) of the curve already implies the imminent removal of accommodative monetary policy, even though we do not think this is likely happen any time soon. Despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Structured products, namely Asset Backed Securities (ABS) and Commercial Mortgage Backed Securities (CMBS), have benefited significantly from the TALF and PPIP programs. Despite the tremendous price appreciation experienced in these sectors already, we believe opportunity remains. In the ABS space, auto receivables with accumulated capital cushions remain attractive. Similarly, the higher quality tranches of well underwritten CMBS structures remain attractive despite a less than rosy forecast for commercial real estate.
Corporate credit has had a record breaking year already especially within the high yield market and investment grade market. Despite this performance, current spread levels remain congruent with past recessions; and we feel that the expected ongoing economic weakness is already “priced-in”.
We expect positive returns from corporate debt in the coming fourth quarter but on a much more modest level relative to the results year to date. These asset classes, in particular high yield bonds, offer the most compelling prospects for yield and total return in the Fund. Bank loans, although still attractive on a fundamental basis, are expected to contribute less on a yield basis to the Fund and offer less potential for continued capital appreciation.
Distribution by Credit Quality
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

 

Diversification by Industry
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

 

The Hartford Strategic Income Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Strategic Income Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Strategic Income Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Strategic Income Fund
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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  
       
 
      
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Strategic Income Fund
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.
The accompanying notes are an integral part of these financial statements.

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.
Futures Contracts Outstanding 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.
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford Strategic Income Fund
Investment Valuation Hierarchy Level Summary
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.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
                                                 
                    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.
The accompanying notes are an integral part of these financial statements.

14

 

The Hartford Strategic Income Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

15

 

The Hartford Strategic Income Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

16

 

The Hartford Strategic Income Fund
Statement of Changes in Net Assets

(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  
 
            
The accompanying notes are an integral part of these financial statements.

17

 

The Hartford Strategic Income Fund
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 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.
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

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

 

The Hartford Strategic Income Fund
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.

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

 

The Hartford Strategic Income Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Strategic Income Fund
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  
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.
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.

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.
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
  $ 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

 

The Hartford Strategic Income Fund
Notes to Financial Statements — (continued)
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.
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
     0.500 %
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

 

The Hartford Strategic Income Fund
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 $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.
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
   $ 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  
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
     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

 

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.

29

 

The Hartford Strategic Income Fund
Financial Highlights
- Selected Per-Share Data (a) -
                                                                                         
    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

 

- 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)
 
 
                                                  
 
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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Strategic Income Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian, agent banks, and brokers or by other appropriate auditing procedures where replies from agent banks or brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Strategic Income Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

32

 

The Hartford Strategic Income Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford Strategic Income Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

35

 

The Hartford Strategic Income Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

36

 

The Hartford Strategic Income Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Strategic Income Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Strategic Income Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

38

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and

39

 

The Hartford Strategic Income Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

40

 

The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

41

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-37 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

(HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford Target Retirement 2010 Fund
Table of Contents
         
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.
Performance Overview(1) 9/30/05 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(PERFORMANCE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                 
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(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.
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.
     
Portfolio Managers
    
Hugh Whelan, CFA
   Edward C. Caputo, CFA
Managing Director
   Vice President
How did the Fund perform?
The Class A shares of The Hartford Target Retirement 2010 Fund returned 19.45%, 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 2010 Funds, a group of funds with investment strategies similar to those of the Fund, was 16.06%.
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.
During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk

2

 

seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Within fixed income, yields decreased during the year, with the ten-year Treasury note yield falling 57 basis points to 3.38% and the five-year Treasury note yield falling 52 basis points to 2.31%. Within the major sectors of the Barclays Capital U.S. Aggregate Index, Credit was the top performer, while Agency securities were the worst. High Yield asset classes such as U.S. high yield bonds, floating rate notes, and Emerging Market Debt significantly outperformed the Barclays Capital U.S. Aggregate Index. The Barclays Capital High Yield index, for example, posted strong results, up 48.1% over the period.
Generally, the Fund’s target asset allocation is set at approximately 56% equities and 44% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the Fund’s performance. Specifically, favorable allocations within international markets into emerging market, international small-cap stocks, and international real estate investment trusts (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The Fund’s strategic asset allocation decisions within fixed income detracted from performance. Although the Fund benefited from exposures to high yield asset classes, diversification within these high yield asset classes detracted from results. The Fund’s duration (i.e. sensitivity to changes in interest rates) is targeted to be less than the Barclays Capital Aggregate Index, a decision based on the risk preferences of the Fund. For the year, duration positioning detracted from performance.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it has behaved historically. Finally a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our underlying fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). A hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required in March 2009 to restore the Fund allocations back to their targets.
During the period, the Fund continued to utilize exchange-traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Doing so enables the Fund to capture additional opportunities, while also enhancing its diversification. Specifically, the Fund has set target allocations to ETFs that provide U.S. real estate, international real estate and emerging market debt exposure. During the period, the Fund increased its weighting in REITs, recognizing the inflationary benefits of the asset class.
What is the outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters. We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2%–3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there is no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months–3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Going forward, the Fund is positioned with an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to small and large-cap international equities. High yield and floating rate notes exposure has been reduced to a more neutral weight as they are approaching fair value on the back of improved fundamentals. Lastly, we have reversed the underweight in inflation protected securities.
Composition by Investments
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

 

The Hartford Target Retirement 2010 Fund
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Target Retirement 2010 Fund
Investment Valuation Hierarchy Level Summary
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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Target Retirement 2010 Fund
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Target Retirement 2010 Fund
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.
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Target Retirement 2010 Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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).
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Target Retirement 2010 Fund
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

 

The Hartford Target Retirement 2010 Fund
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

 

The Hartford Target Retirement 2010 Fund
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

 

The Hartford Target Retirement 2010 Fund
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

 

The Hartford Target Retirement 2010 Fund
Financial Highlights
- 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)
   $ 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

 

- Ratios and Supplemental Data -
                                                     
                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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Target Retirement 2010 Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Target Retirement 2010 Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Target Retirement 2010 Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford Target Retirement 2010 Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

21

 

The Hartford Target Retirement 2010 Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Target Retirement 2010 Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Target Retirement 2010 Fund
Shareholder Meeting Results (Unaudited)
The following proposal was addressed and approved during the period at a special meeting of shareholders held on July 16, 2009.
Proposal to approve Articles of Amendment of The Hartford Mutual Funds, Inc. and a Plan of Reclassification for The Hartford Target Retirement 2010 Fund whereby Class B shares will be reclassified as Class A shares.
                         
Fund Name   For   Against   Abstain
The Hartford Target Retirement 2010 Fund — Class B shares
     42,049.69       0       0  
Proposal to approve Articles of Amendment of The Hartford Mutual Funds, Inc. and a Plan of Reclassification for The Hartford Target Retirement 2010 Fund whereby Class C shares will be reclassified as Class A shares.
                         
Fund Name   For   Against   Abstain
The Hartford Target Retirement 2010 Fund — Class C shares
     48,378.00       972.00       1,562.40  

24

 

The Hartford Target Retirement 2010 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Target Retirement 2010 Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

25

 

The Hartford Target Retirement 2010 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the

26

 

Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.

27

 

The Hartford Target Retirement 2010 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

28

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(HARTFORD LOGO)
MFAR-38 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)

 

 

The Hartford Target Retirement 2015 Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
Financial Statements
        
    4  
    5  
    6  
    7  
    8  
    9  
    16  
    18  
    19  
    21  
    21  
    22  
    23  
    24  

 

 

The Hartford Target Retirement 2015 Fund inception 10/31/2008
     
(subadvised by Hartford Investment Management Company)
   Investment objective — Seeks to maximize total return and
secondarily, to seek capital preservation.
Performance Overview(1) 10/31/08 — 10/31/09
Growth of a $10,000 investment in Class R3
(LINE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
Average Annual Total Returns(2) (as of 10/31/09)
                 
    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 %
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
 
(1)   Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 10/31/09, which excludes investment transactions as of this date.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
     
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 2015 Fund returned 18.33%, 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 2015 Funds, a group of funds with investment strategies similar to those of the Fund, was 16.92%.
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.
During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index

2

 

and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Within fixed income, yields decreased during the year, with the ten-year Treasury note yield falling 57 basis points to 3.38% and the five-year Treasury note yield falling 52 basis points to 2.31%. Within the major sectors of the Barclays Capital U.S. Aggregate Index, Credit was the top performer, while Agency securities were the worst. High Yield asset classes such as U.S. high yield bonds, floating rate notes, and Emerging Market Debt significantly outperformed the Barclays Capital U.S. Aggregate Index. The Barclays Capital High Yield index, for example, posted strong results, up 48.1% over the period.
Generally, the Fund’s target asset allocation is set at approximately 64% equities and 36% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the fund’s performance. Specifically, favorable allocations within international markets into emerging market, international small-cap stocks, and international real estate investment trusts (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The Fund’s strategic asset allocation decisions within fixed income detracted from performance. Although the Fund benefited from exposures to high yield asset classes, diversification within these high yield asset classes detracted from results. The Fund’s duration (i.e. sensitivity to changes in interest rates) is targeted to be less than the Barclays Capital Aggregate Index, a decision based on the risk preferences of the Fund. For the year, duration positioning detracted from performance.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it has behaved historically. Finally, a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our underlying fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). A hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required in March 2009 to restore the Fund allocations back to their targets.
During the period, the Fund continued to utilize exchange-traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Doing so enables the Fund to capture additional opportunities, while also enhancing its diversification. Specifically, the Fund has set target allocations to ETFs that provide U.S. real estate, international real estate and emerging market debt exposure. During the period, the Fund increased its weighting in REITs, recognizing the inflationary benefits of the asset class.
What is the outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters.
We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2%-3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there is no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months–3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Going forward, the portfolio is positioned with an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to small and large-cap international equities. High yield and floating rate notes exposure has been reduced to a more neutral weight as they are approaching fair value on the back of improved fundamentals. Lastly, we have reversed the underweight in inflation protected securities.
Composition by Investments
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

 

The Hartford Target Retirement 2015 Fund
Schedule of Investments
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Target Retirement 2015 Fund
Investment Valuation Hierarchy Level Summary
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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Target Retirement 2015 Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Target Retirement 2015 Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Target Retirement 2015 Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
            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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Target Retirement 2015 Fund
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 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

 

The Hartford Target Retirement 2015 Fund
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

 

The Hartford Target Retirement 2015 Fund
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

 

The Hartford Target Retirement 2015 Fund
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

 

The Hartford Target Retirement 2015 Fund
Financial Highlights
- 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
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

 

- Ratios and Supplemental Data -
                                                         
                    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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Target Retirement 2015 Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statements of operations, changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Target Retirement 2015 Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Target Retirement 2015 Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).

19

 

The Hartford Target Retirement 2015 Fund
Directors and Officers (Unaudited) — (continued)
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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.
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.

20

 

Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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.
Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

21

 

The Hartford Target Retirement 2015 Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Target Retirement 2015 Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Target Retirement 2015 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Target Retirement 2015 Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and

24

 

resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.

25

 

The Hartford Target Retirement 2015 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

26

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-39 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(THE HARTFORD LOGO)
(THE HARTFORD MUTUAL FUNDS LOGO)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Target Retirement 2020 Fund

 

 

The Hartford Target Retirement 2020 Fund
Table of Contents
         
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 2020 Fund inception 09/30/2005
     
(subadvised by Hartford Investment Management Company)
  Investment objective – Seeks to maximize total return and secondarily, to seek capital preservation.
Performance Overview(1) 9/30/05 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                 
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(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
How did the Fund perform?
The Class A shares of The Hartford Target Retirement 2020 Fund returned 19.38%, 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 2020 Funds, a group of funds with investment strategies similar to those of the Fund, was 16.67%.
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

 

During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Generally, the Fund’s target asset allocation is set at approximately 69% equities and 31% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the fund’s performance. Specifically, favorable allocations within international markets into emerging market, international small-cap stocks, and international real estate investment trusts (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The Fund benefited from our strategic asset allocation decisions within fixed income. The Fund’s allocations to intermediate-term bonds, Treasury Inflation-Protected Securities (TIPS), and an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to high yield, had a favorable impact on performance.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it has behaved historically. Finally, a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our underlying fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). A hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required in March 2009 to restore the portfolio allocations back to their targets.
During the period, the Fund continued to utilize exchange-traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Doing so enables the Fund to capture additional opportunities, while also enhancing its diversification. Specifically, the Fund has set target allocations to ETFs that provide U.S. real estate, international real estate and emerging market debt exposure. During the period, the Fund increased its weighting in REITs, recognizing the inflationary benefits of the asset class.
What is the outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters. We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2%-3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there is no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months–3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Going forward, the Fund is positioned with an overweight to small and large-cap international equities. High yield and floating rate notes exposure has been reduced to a more neutral weight as they are approaching fair value on the back of improved fundamentals. Lastly, we have reversed the underweight in inflation protected securities.
Composition by Investments
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

 

The Hartford Target Retirement 2020 Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                         
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Target Retirement 2020 Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Target Retirement 2020 Fund
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Target Retirement 2020 Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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.
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Target Retirement 2020 Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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).
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Target Retirement 2020 Fund
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 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

 

The Hartford Target Retirement 2020 Fund
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

 

The Hartford Target Retirement 2020 Fund
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
   $ 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

 

The Hartford Target Retirement 2020 Fund
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 $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

 

The Hartford Target Retirement 2020 Fund
Financial Highlights
- 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(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

 

- 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
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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Target Retirement 2020 Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Target Retirement 2020 Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(Ernet & Young LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Target Retirement 2020 Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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

 

The Hartford Target Retirement 2020 Fund
Directors and Officers (Unaudited) – (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

21

 

The Hartford Target Retirement 2020 Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Target Retirement 2020 Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Target Retirement 2020 Fund
Shareholder Meeting Results (Unaudited)
The following proposal was addressed and approved during the period at a special meeting of shareholders held on July 16, 2009.
Proposal to approve Articles of Amendment of The Hartford Mutual Funds, Inc. and a Plan of Reclassification for The Hartford Target Retirement 2020 Fund whereby Class B shares will be reclassified as Class A shares.
                         
Fund Name   For   Against   Abstain
The Hartford Target Retirement 2020 Fund – Class B shares
     48,040.56       0       0  
Proposal to approve Articles of Amendment of The Hartford Mutual Funds, Inc. and a Plan of Reclassification for The Hartford Target Retirement 2020 Fund whereby Class C shares will be reclassified as Class A shares.
                         
Fund Name   For   Against   Abstain
The Hartford Target Retirement 2020 Fund – Class C shares
     72,568.01       0       2,002.29  

24

 

The Hartford Target Retirement 2020 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Target Retirement 2020 Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

25

 

The Hartford Target Retirement 2020 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the

26

 

Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

27

 

The Hartford Target Retirement 2020 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

28

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-40 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(COMPANY LOGO)
(GRAPHIC)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Target Retirement 2025 Fund

 

 

The Hartford Target Retirement 2025 Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
Financial Statements
        
    4  
    5  
    6  
    7  
    8  
    9  
    16  
    18  
    19  
    21  
    21  
    22  
    23  
    24  

 

 

The Hartford Target Retirement 2025 Fund inception 10/31/2008
(subadvised by Hartford Investment Management Company)
  Investment objective — Seeks to maximize total return and
 
  secondarily, to seek capital preservation.
Performance Overview(1) 10/31/08 — 10/31/09
Growth of a $10,000 investment in Class R3
(PERFORMANCE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2) (as of 10/31/09)
                 
    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 %
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
 
(1)   Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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 2025 Fund returned 17.44%, 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 2025 Funds, a group of funds with investment strategies similar to those of the Fund, was 16.92%.
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

2

 

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.
During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Generally, the Fund’s target asset allocation is set at approximately 76% equities and 24% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the fund’s performance. Specifically, favorable allocations within international markets into emerging market, international small-cap stocks, and international real estate investment trusts (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The Fund benefited from our strategic asset allocation decisions within fixed income. The Fund’s allocations to intermediate-term bonds and Treasury Inflation-Protected Securities (TIPS) more than offset less favorable allocations to short-term bonds.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it has behaved historically. Finally, a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our underlying fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). A hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required in March 2009 to restore the Fund allocations back to their targets.
During the period, the Fund continued to utilize exchange-traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Doing so enables the Fund to capture additional opportunities, while also enhancing its diversification. Specifically, the Fund has set target allocations to ETFs that provide U.S. real estate and international real estate exposure.
What is the outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters.
We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2%-3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there is no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months-3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Going forward, the Fund is positioned with an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to small and large-cap international equities. High yield and floating rate notes exposure has been reduced to a more neutral weight as they are approaching fair value on the back of improved fundamentals. Lastly, we have reversed the underweight in inflation protected securities.
Composition by Investments
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

 

The Hartford Target Retirement 2025 Fund
Schedule of Investments
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Target Retirement 2025 Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Target Retirement 2025 Fund
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Target Retirement 2025 Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Target Retirement 2025 Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
            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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Target Retirement 2025 Fund
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 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

 

The Hartford Target Retirement 2025 Fund
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

 

The Hartford Target Retirement 2025 Fund
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

 

The Hartford Target Retirement 2025 Fund
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

 

[This page is intentionally left blank]

15

 

The Hartford Target Retirement 2025 Fund
Financial Highlights
- 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
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

 

- Ratios and Supplemental Data -
                         
        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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Target Retirement 2025 Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statements of operations, changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Target Retirement 2025 Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.
(Event & Young LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Target Retirement 2025 Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Target Retirement 2025 Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

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The Hartford Target Retirement 2025 Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Target Retirement 2025 Fund
Expense Example (Unaudited)

Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Target Retirement 2025 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Target Retirement 2025 Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

24

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.

25

 

The Hartford Target Retirement 2025 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

26

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(COMPANY LOGO)
MFAR-41 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

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The Hartford Target Retirement 2030 Fund
Table of Contents
         
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 2030 Fund inception 09/30/2005
(subadvised by Hartford Investment Management Company)   Investment objective – Seeks to maximize total return and
secondarily, to seek capital preservation.
Performance Overview(1) 9/30/05 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4) (as of 10/31/09)
                 
    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
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(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  
How did the Fund perform?
The Class A shares of The Hartford Target Retirement 2030 Fund returned 17.62%, 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 2030 Funds, a group of funds with investment strategies similar to those of the Fund, was 17.12%.
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

 

During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Generally, the Fund’s target asset allocation is set at approximately 81% equities and 19% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the fund’s performance. Specifically, favorable allocations within international markets into emerging market, international small-cap stocks, and international real estate investment trusts (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The Fund benefited from our strategic asset allocation decisions within fixed income. The Fund’s allocations to intermediate-term bonds and Treasury Inflation-Protected Securities (TIPS) had a favorable impact on performance.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it behaves historically. Finally, a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our underlying fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). A hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required in March 2009 to restore the Fund allocations back to their targets.
During the period, the Fund continued to utilize exchange-traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Doing so enables the Fund to capture additional opportunities, while also enhancing its diversification. Specifically, the Fund has set target allocations to ETFs that provide U.S. real estate and international real estate exposure.
What is the outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters. We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2%-3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there is no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months–3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Going forward, the Fund is positioned with an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to small and large-cap international equities. High yield and floating rate notes exposure has been reduced to a more neutral weight as they are approaching fair value on the back of improved fundamentals. Lastly, we have reversed the underweight in inflation protected securities.
Composition by Investments
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

 

The Hartford Target Retirement 2030 Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                         
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Target Retirement 2030 Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Target Retirement 2030 Fund
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Target Retirement 2030 Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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.
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Target Retirement 2030 Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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).
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Target Retirement 2030 Fund
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 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

 

The Hartford Target Retirement 2030 Fund
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

 

The Hartford Target Retirement 2030 Fund
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

 

The Hartford Target Retirement 2030 Fund
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

 

The Hartford Target Retirement 2030 Fund
Financial Highlights
                                                                                         
- 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Target Retirement 2030 Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Target Retirement 2030 Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(SIGNATURE)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Target Retirement 2030 Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
    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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
    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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
    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.
Sandra S. Jaffee (1941) Director since 2005
    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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
    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.

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The Hartford Target Retirement 2030 Fund
Directors and Officers (Unaudited) – (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

21

 

The Hartford Target Retirement 2030 Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Target Retirement 2030 Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Target Retirement 2030 Fund
Shareholder Meeting Results (Unaudited)
The following proposal was addressed and approved during the period at a special meeting of shareholders held on July 16, 2009.
Proposal to approve Articles of Amendment of The Hartford Mutual Funds, Inc. and a Plan of Reclassification for The Hartford Target Retirement 2030 Fund whereby Class B shares will be reclassified as Class A shares.
                         
Fund Name   For   Against   Abstain
The Hartford Target Retirement 2030 Fund – Class B shares
     53,974.38       587.13       3,274.15  
Proposal to approve Articles of Amendment of The Hartford Mutual Funds, Inc. and a Plan of Reclassification for The Hartford Target Retirement 2030 Fund whereby Class C shares will be reclassified as Class A shares.
                         
Fund Name   For   Against   Abstain
The Hartford Target Retirement 2030 Fund – Class C shares
     70,145.03       0       479.30  

24

 

The Hartford Target Retirement 2030 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Target Retirement 2030 Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

25

 

The Hartford Target Retirement 2030 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the

26

 

Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

27

 

The Hartford Target Retirement 2030 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

28

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-42 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

 

(THE HARTFORD LOGO)
(GRAPHIC)

 

 

The Hartford Target Retirement 2035 Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
Financial Statements
        
    4  
    5  
    6  
    7  
    8  
    9  
    16  
    18  
    19  
    21  
    21  
    22  
    23  
    24  

 

 

The Hartford Target Retirement 2035 Fund inception 10/31/2008
(subadvised by Hartford Investment Management Company)
  Investment objective — Seeks to maximize total return and secondarily, to seek capital preservation.
Performance Overview(1) 10/31/08 — 10/31/09
Growth of a $10,000 investment in Class R3
(LINE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2) (as of 10/31/09)
                 
    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 %
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
 
(1)   Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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

 

During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Generally, the Fund’s target asset allocation is set at approximately 87% equities and 13% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the Fund’s performance. Specifically, favorable allocations within international markets into emerging market, international small-cap stocks, and international real estate investment trusts (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The Fund benefited from our strategic asset allocation decisions within fixed income. Allocations to Treasury Inflation-Protected Securities (TIPS) and intermediate-term bonds more than offset less favorable allocations to short-term bonds.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it has behaved historically. Finally, a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our underlying fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). A hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required in March 2009 to restore the portfolio allocations back to their targets.
During the period, the Fund continued to utilize exchange-traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Doing so enables the Fund to capture additional opportunities, while also enhancing its diversification. Specifically, the Fund has set target allocations to ETFs that provide U.S. real estate and international real estate exposure.
What is the outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters. We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2% - 3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there is no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months — 3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Going forward, the portfolio is positioned with an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to small and large-cap international equities. High yield and floating rate notes exposure has been reduced to a more neutral weight as they are approaching fair value on the back of improved fundamentals. Lastly, we have reversed the underweight in inflation protected securities.
Composition by Investments
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

 

The Hartford Target Retirement 2035 Fund
Schedule of Investments
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Target Retirement 2035 Fund
Investment Valuation Hierarchy Level Summary
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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Target Retirement 2035 Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Target Retirement 2035 Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Target Retirement 2035 Fund
Statement of Changes in Net Assets
(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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Target Retirement 2035 Fund
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 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

 

The Hartford Target Retirement 2035 Fund
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

 

The Hartford Target Retirement 2035 Fund
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
  $ 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

 

The Hartford Target Retirement 2035 Fund
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
  $ 4,388  
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.

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15

 

The Hartford Target Retirement 2035 Fund
Financial Highlights
- 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
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

 

- Ratios and Supplemental Data -
                                                 
            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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Target Retirement 2035 Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statements of operations, changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Target Retirement 2035 Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Target Retirement 2035 Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Target Retirement 2035 Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

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The Hartford Target Retirement 2035 Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

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The Hartford Target Retirement 2035 Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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  

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The Hartford Target Retirement 2035 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Target Retirement 2035 Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

24

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets

25

 

The Hartford Target Retirement 2035 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

26

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-43 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

(THE HARTFORD LOGO)
(GRAPHIC)

 

 

The Hartford Target Retirement 2040 Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
Financial Statements
        
    4  
    5  
    6  
    7  
    8  
    9  
    16  
    18  
    19  
    21  
    21  
    22  
    23  
    24  

 

 

The Hartford Target Retirement 2040 Fund inception 10/31/2008
(subadvised by Hartford Investment Management Company)
Investment objective — Seeks to maximize total return and
secondarily, to seek capital preservation.
Performance Overview(1) 10/31/08 — 10/31/09
Growth of a $10,000 investment in Class R3
(PERFORMANCE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2) (as of 10/31/09)
                 
    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 %
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
 
(1)   Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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 2040 Fund returned 17.34%, 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 2040 Funds, a group of funds with investment strategies similar to those of the Fund, was 16.98%.
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

 

During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Generally, the Fund’s target asset allocation is set at approximately 91% equities and 9% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the Fund’s performance. Specifically, favorable allocations within international markets into emerging market, international small-cap stocks, and international real estate investment trust (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The Fund benefited from our strategic asset allocation decisions within fixed income. Allocations to Treasury Inflation-Protected Securities (TIPS) and intermediate-term bonds more than offset less favorable allocations to short-term bonds.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking through each underlying fund’s objectives and stated benchmark to see what it actually holds and how it has behaved historically. Finally, a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our underlying fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). A hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required in March 2009 to restore the Fund allocations back to their targets.
During the period, the Fund continued to utilize exchange-traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Doing so enables the Fund to capture additional opportunities, while also enhancing its diversification. Specifically, the Fund has set target allocations to ETFs that provide U.S. real estate and international real estate exposure.
What is the outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters. We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2% - 3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there is no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months — 3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Going forward, the Fund is positioned with an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to small and large-cap international equities. High yield and floating rate notes exposure has been reduced to a more neutral weight as they are approaching fair value on the back of improved fundamentals. Lastly, we have reversed the underweight in inflation protected securities.
Composition by Investments
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

 

The Hartford Target Retirement 2040 Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                         
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Target Retirement 2040 Fund
Investment Valuation Hierarchy Level Summary
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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Target Retirement 2040 Fund
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Target Retirement 2040 Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Target Retirement 2040 Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
            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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Target Retirement 2040 Fund
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 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

 

The Hartford Target Retirement 2040 Fund
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

 

The Hartford Target Retirement 2040 Fund
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
   $ 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

 

The Hartford Target Retirement 2040 Fund
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

 

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15

 

The Hartford Target Retirement 2040 Fund
Financial Highlights
- 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
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

 

- 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)
17.34%
   $ 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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
of The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Target Retirement 2040 Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statements of operations, changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Target Retirement 2040 Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Target Retirement 2040 Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Target Retirement 2040 Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

21

 

The Hartford Target Retirement 2040 Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Target Retirement 2040 Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Target Retirement 2040 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Target Retirement 2040 Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and

24

 

resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.

25

 

The Hartford Target Retirement 2040 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

26

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-44 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

(THE HARTFORD LOGO)
(GRAPHIC)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Target Retirement 2045 Fund

 

 

The Hartford Target Retirement 2045 Fund
Table of Contents
         
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.
Performance Overview(1) 10/31/08 — 10/31/09
Growth of a $10,000 investment in Class R3
(PERFORMANCE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2) (as of 10/31/09)
                 
    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 %
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
 
(1)   Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these share classes.
 
(2)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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 2045 Fund returned 17.28%, 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 2045 Funds, a group of funds with investment strategies similar to those of the Fund, was 17.13%.
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

 

During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Generally, the Fund’s target asset allocation is set at approximately 95% equities and 5% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the fund’s performance. Specifically, favorable allocations within international markets into emerging market, international small-cap stocks, and international real estate investment trusts (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The fund benefited from our strategic asset allocation decisions within fixed income. The Fund’s overweight (i.e. the Fund’s sector position was greater than the benchmark position) to Treasury Inflation-Protected Securities (TIPS) had a favorable impact on performance.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it has behaved historically. Finally, a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). No hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required for the reporting period.
During the period, the Fund continued to utilize exchange-traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Doing so enables the Fund to capture additional opportunities, while also enhancing its diversification. Specifically, the Fund has set target allocations to ETFs that provide U.S. real estate and international real estate exposure.
What is the outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters. We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2% — 3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there is no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months — 3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Going forward, the Fund is positioned with an overweight to small and large-cap international equities. High yield and floating rate notes exposure has been reduced to a more neutral weight as they are approaching fair value on the back of improved fundamentals. Lastly, we have reversed the underweight in inflation protected securities.
Composition by Investments
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

 

The Hartford Target Retirement 2045 Fund
Schedule of Investments
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Target Retirement 2045 Fund
Investment Valuation Hierarchy Level Summary
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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Target Retirement 2045 Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Target Retirement 2045 Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Target Retirement 2045 Fund
Statement of Changes in Net Assets
(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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Target Retirement 2045 Fund
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 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

 

The Hartford Target Retirement 2045 Fund
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

 

The Hartford Target Retirement 2045 Fund
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  
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

 

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
1.25%
  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

 

The Hartford Target Retirement 2045 Fund
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

 

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15

 

The Hartford Target Retirement 2045 Fund
Financial Highlights
- 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
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

 

 
 
- Ratios and Supplemental Data -
                                                         
                    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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Target Retirement 2045 Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statements of operations, changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Target Retirement 2045 Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Target Retirement 2045 Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Target Retirement 2045 Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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.

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Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

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The Hartford Target Retirement 2045 Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

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The Hartford Target Retirement 2045 Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                                                                   
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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  

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The Hartford Target Retirement 2045 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Target Retirement 2045 Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

24

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered

25

 

The Hartford Target Retirement 2045 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

26

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-45 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

 

(THE HARTFORD LOGO)
(GRAPHIC)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Target Retirement 2050 Fund

 

 

The Hartford Target Retirement 2050 Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
Financial Statements
        
    4  
    5  
    6  
    7  
    8  
    9  
    16  
    18  
    19  
    21  
    21  
    22  
    23  
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The Hartford Target Retirement 2050 Fund inception 10/31/2008
     
(subadvised by Hartford Investment Management Company)
  Investment objective — Seeks to maximize total return and secondarily, to seek capital preservation.
Performance Overview(1) 10/31/08 — 10/31/09
Growth of a $10,000 investment in Class R3
(PERFORMANCE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
S&P 500 Index is a market capitalization weighted price index composed of 500 widely held common stocks.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2) (as of 10/31/09)
                 
    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 %
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
 
(1)   Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these share classes.
(2)   Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on 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 2050 Fund returned 17.18%, 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 2050 Funds, a group of funds with investment strategies similar to those of the Fund, was 17.65%.
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

 

During the period, the S&P 500 rose 9.8%. Across the different market capitalizations, mid-cap and large-cap stocks outperformed small-cap stocks. Within U.S. equities, the growth investment style outperformed value. In contrast to last year, international stocks outperformed U.S. stocks. Specifically, Emerging Markets stock, measured by the MSCI Emerging Markets Stock Index, posted the strongest results, up 64.6%. In March, investors abruptly changed their attitude from risk aversion to risk seeking. This was clearly evidenced by the high yield and equity rallies that continued into the third quarter of 2009, with the S&P 500 rising 55% since the risk rally began in March. Within equities, investors preferred riskier small cap stocks and low-quality stocks. The Russell 2000 Index and Russell Mid-Cap Index both outperformed their large cap counterparts. Lower quality S&P 500 stocks outperformed their higher quality peers.
Generally, the Fund’s target asset allocation is set at approximately 95% equities and 5% fixed-income. The Fund’s strategic asset allocation decisions within equities contributed to the fund’s performance. Specifically, favorable allocations within international markets into emerging market, international small-cap stocks, and international real estate investment trusts (REITs) helped to offset an underweight (i.e. the Fund’s sector position was less than the benchmark position) to small and mid-cap stocks. The Fund benefited from our strategic asset allocation decisions within fixed income. The Fund’s overweight (i.e. the Fund’s sector position was greater than the benchmark position) to Treasury Inflation-Protected Securities (TIPS) had a favorable impact on performance.
Beyond the asset allocation decision, we also add value by selecting the underlying mutual funds that will most effectively deliver the target asset class exposures. This is accomplished by analyzing the underlying funds available in our investment universe, and by looking past each underlying fund’s objectives and stated benchmark to see what it actually holds for securities and how it has behaved historically. Finally, a proprietary optimization is run to determine which underlying funds the Fund should invest in. During the year, our fund selection enhanced relative performance (i.e. performance of the Fund as measured against the benchmark). No hard rebalance (i.e. a fund rebalancing to move the underlying fund investments to their target allocation percentages) was required for the reporting period.
During the period, the Fund continued to utilize exchange-traded funds (ETFs) to obtain asset class exposures unavailable through The Hartford fund family. Doing so enables the Fund to capture additional opportunities, while also enhancing its diversification. Specifically, the Fund has set target allocations to ETFs that provide U.S. real estate and international real estate exposure.
What is the outlook?
While the risk rally that began in early March has pushed equities and other high risk asset classes higher around the world, we believe that the appreciation of equities and higher risk fixed income asset classes will be more muted following their dramatic recovery in the 2nd and 3rd quarters. We believe going forward investors will moderate their risk appetite and prefer companies with the healthiest fundamentals. These companies will be the ones most likely to thrive during the difficult economic times that we believe may still lie ahead of us.
Our view of the yield curve is consistent with low growth and low inflation and we expect yields to remain in their current ranges across the curve (10 year range of 3.2% — 3.8%). In addition, we believe downward pressure on inflation has abated. However, slack in the economy means there is no near-term upward pressures on inflation. Longer maturities will likely remain in range despite continued concerns with supply pressures, inflation, dollar policy, and weak growth. We think the shape of the short end (3 months – 3 years) of the curve already implies the imminent removal of accommodative monetary policy and despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Going forward, the Fund is positioned with an overweight to small and large-cap international equities. High yield and floating rate notes exposure has been reduced to a more neutral weight as they are approaching fair value on the back of improved fundamentals. Lastly, we have reversed the underweight in inflation protected securities.
Composition by Investments
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

 

The Hartford Target Retirement 2050 Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                         
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.
The accompanying notes are an integral part of these financial statements.

4

 

The Hartford Target Retirement 2050 Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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     $ —     $ —  
 
                        
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Target Retirement 2050 Fund
Statement of Assets and Liabilities
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 $3,103)
     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  
 
      
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Target Retirement 2050 Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Target Retirement 2050 Fund
Statement of Changes in Net Assets
(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 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.
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Target Retirement 2050 Fund
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 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

 

The Hartford Target Retirement 2050 Fund
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

 

The Hartford Target Retirement 2050 Fund
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

 

The Hartford Target Retirement 2050 Fund
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

 

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15

 

The Hartford Target Retirement 2050 Fund
Financial Highlights
- 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
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

 

- Ratios and Supplemental Data -
                                                 
            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

 

Report of Independent Registered Public Accounting Firm
The Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Target Retirement 2050 Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statements of operations, changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Target Retirement 2050 Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

18

 

The Hartford Target Retirement 2050 Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Target Retirement 2050 Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
    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.
Lemma W. Senbet (1946) Director since 2005
    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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
    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.
John C. Walters* (1962) Director since 2008
    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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
    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.
Brian Ferrell (1962) AML Compliance Officer since 2008
    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. Robert J. Froehlich (1953) Senior Managing Director since 2009
    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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
    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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
    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.
Vernon J. Meyer (1964) Vice President since 2006
    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.
D. Keith Sloane (1960) Vice President since 2009
    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.
Jane Wolak (1961) Vice President since 2009
    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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

21

 

The Hartford Target Retirement 2050 Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

22

 

The Hartford Target Retirement 2050 Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Target Retirement 2050 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Target Retirement 2050 Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

24

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered

25

 

The Hartford Target Retirement 2050 Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) — (continued)
representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

26

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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-46 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117
(THE HARTFORD LOGO)

 

(THE HARTFORD LOGO)
(GRAPHIC)
THE HARTFORD MUTUAL FUNDS 2009 Annual Report The Hartford Total Return Bond Fund

 

 

The Hartford Total Return Bond Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
Financial Statements
        
    5  
    15  
    16  
    17  
    18  
    19  
    34  
    36  
    37  
    39  
    39  
    40  
    41  
    42  
    43  

 

 

The Hartford Total Return Bond Fund inception 07/22/1996
     
(subadvised by Hartford Investment Management Company)
  Investment objective — Seeks a competitive total return, with
 
  income as a secondary objective.
Performance Overview(1) 10/31/99 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(PERFORMANCE GRAPH)
Barclays Capital U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Capital Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
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)   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.
Portfolio Manager
Nasri Toutoungi
Managing Director
How did the Fund perform?
The Class A shares of The Hartford Total Return Bond Fund returned 16.38%, before sales charge, for the twelve-month period ended October 31, 2009. In comparison, its benchmark, the Barclays Capital U.S. Aggregate Bond Index, returned 13.79%, while the average return of the Lipper Intermediate Investment Grade Funds category, a group of funds with investment strategies similar to those of the Fund, was 17.67%.
Why did the Fund perform this way?
The twelve-month period ending October 31, 2009, had three phases. The last two months of 2008 were marked by continued broad weakness in asset prices. The first quarter of 2009 was unique for the recovery in industrial debt spreads across the rating spectrum, but weakness continued in Equities, Commercial Real Estate and Bank and Finance Company Debt. The third phase began mid March with the recovery of equities and was perpetuated by the expansion of Term Asset-Backed Securities Loan Facility (TALF), the initiation of the Public-Private Investment Program (PPIP) and the successful results of the U.S. Department of the Treasury’s bank stress tests. Since the early part of second quarter 2009 all fixed income spread sectors (i.e. issues yielding more than Treasuries) have experienced spread tightening (i.e. short and long term interest rates moving closer together) and significant outperformance versus like maturity Treasuries.

2

 

The Fund began the year overweight (i.e. the Fund’s sector position was greater than the benchmark position) spread sectors such as Investment Grade and High Yield Corporate Debt and subsequently added to those overweights as confidence was restored to the financial markets. It was this overweight to spread product and well timed expansion of the overweight that led to benchmark outperformance over the period.
The majority of the investment grade corporate overweight was allocated in the Industrial sector, but an overweight was also maintained in Financials. The Barclays Capital Investment Grade Corporate Index produced an excess return of 24.25% (over similar duration treasuries) in the twelve-month period ending October 31, 2009. Similarly, the Fund maintained an overweight to Commercial Mortgage Backed Securities (CMBS) through most of the year. The Barclays Capital CMBS Index produced a 16.12% excess return (over similar duration treasuries) over the period.
The Fund also maintained allocations to out of benchmark sectors. Allocations were adjusted throughout the period, but the average allocation to High Yield, Bank Loans and Emerging Markets was 4.4%, 3.6% and 1.2%, respectively. Total returns for each of these sectors were significantly higher than that of the Barclays Capital U.S. Aggregate Bond Index.
The Fund was underweight (i.e. the Fund’s sector position was less than the benchmark position) the benchmark in Treasuries, Mortgage Backed Securities (MBS) and Agencies. Although Agencies and MBS had positive returns over the period, those returns significantly lagged those of the previously mentioned sectors.
Yield curve and duration (i.e. sensitivity to changes in interest rates) exposure was applied tactically throughout the period but very little performance can be attributed to this positioning. This was due to the fact that the Fund had intermittent periods of both positive and negative contributions from yield curve / duration, in essence canceling each other out.
What is Your Outlook?
Our view of the yield curve is consistent with low growth and low inflation. We expect yields to remain in their current ranges across the curve (ten year range 3.2%-3.8%). Longer maturities will continue to experience volatility with supply pressure, inflation concerns, dollar policy concerns and weak growth but will likely remain in a range as well. We think the shape of the short end (three month-three years) of the curve already implies the imminent removal of accommodative monetary policy, even though we do not think this is likely happen any time soon. Despite the very low level of two year yields, the marginal increase in yields from three months to two years is compelling.
Structured products, namely Asset Backed Securities (ABS) and CMBS, have benefited significantly from the TALF and PPIP programs. Despite the tremendous price appreciation experienced in these sectors already, we believe opportunity remains. In the ABS space, Auto Receivables with accumulated capital cushions remain attractive. Similarly, the higher quality tranches of well underwritten CMBS structures remain attractive despite a less than rosy forecast for commercial real estate.
Corporate credit has had a record breaking year already especially within the high yield market and investment grade market. Despite this performance, current spread levels remain congruent with past recessions; and we feel that the expected ongoing economic weakness is already “priced-in”.
We expect positive returns from Corporate Debt in the coming fourth quarter but on a much more modest level relative to the results year to date. These asset classes, in particular High Yield Bonds, offer the most compelling prospects for yield and total return in the Fund. Bank Loans, although still attractive on a fundamental basis, are expected to contribute less on a yield basis to the Fund and offer less potential for continued capital appreciation.
Distribution by Credit Quality
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 %
 
        
Diversification by Security Type
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

 

Diversification by Industry
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

 

The Hartford Total Return Bond Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Total Return Bond Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Total Return Bond Fund
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  
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Total Return Bond Fund
Schedule of Investments — (continued)
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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  
The accompanying notes are an integral part of these financial statements.

11

 

The Hartford Total Return Bond Fund
Schedule of Investments — (continued)
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

13

 

The Hartford Total Return Bond Fund
Schedule of Investments — (continued)
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  
The aggregate value of these securities at October 31, 2009 was $19,780 which represents 1.00% of total net assets.
Forward Foreign Currency Contracts Outstanding at October 31, 2009
                                 
                            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.
The accompanying notes are an integral part of these financial statements.

14

 

The Hartford Total Return Bond Fund
Investment Valuation Hierarchy Level Summary
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.
The accompanying notes are an integral part of these financial statements.

15

 

The Hartford Total Return Bond Fund
Statement of Assets and Liabilities
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  
 
      
The accompanying notes are an integral part of these financial statements.

16

 

The Hartford Total Return Bond Fund
Statement of Operations
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  
 
      
The accompanying notes are an integral part of these financial statements.

17

 

The Hartford Total Return Bond Fund
Statement of Changes in Net Assets

(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.
The accompanying notes are an integral part of these financial statements.

18

 

The Hartford Total Return Bond Fund
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 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

 

The Hartford Total Return Bond Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Total Return Bond Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Total Return Bond Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Total Return Bond Fund
Notes to Financial Statements — (continued)
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

 

The Hartford Total Return Bond Fund
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  
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

 

The Hartford Total Return Bond Fund
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 $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  
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
    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

 

The Hartford Total Return Bond Fund
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  
The Hartford Income Allocation Fund had the following unrealized appreciation, accumulated net realized losses and capital stock as of October 2, 2009.
                         
    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

 

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33

 

The Hartford Total Return Bond Fund
Financial Highlights
- 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
   $ 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

 

- 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)
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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Total Return Bond Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Total Return Bond Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(ERNST & YOUNG LLP)
Minneapolis, MN
December 15, 2009

36

 

The Hartford Total Return Bond Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee

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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004

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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee

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.
Sandra S. Jaffee (1941) Director since 2005

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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee

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

 

The Hartford Total Return Bond Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee

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.
Lemma W. Senbet (1946) Director since 2005

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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee

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.
John C. Walters* (1962) Director since 2008

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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)

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.
Brian Ferrell (1962) AML Compliance Officer since 2008

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. Robert J. Froehlich (1953) Senior Managing Director since 2009

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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006

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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005

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.
Vernon J. Meyer (1964) Vice President since 2006

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.
D. Keith Sloane (1960) Vice President since 2009

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.
Jane Wolak (1961) Vice President since 2009

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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

39

 

The Hartford Total Return Bond Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
The income received from federal obligations is as follows:
         
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).
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

40

 

The Hartford Total Return Bond Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)           
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Total Return Bond Fund
Shareholder Meeting Results (Unaudited)
The following proposal was addressed and approved during the period at a special meeting of shareholders of The Hartford Income Allocation Fund held on September 9, 2009.
Proposal to approve a Plan of Reorganization providing for the acquisition of all of the assets and liabilities of The Hartford Income Allocation Fund (the “Acquired Fund”) by the Fund (the “Acquiring Fund”) solely in exchange for shares of the Acquiring Fund, followed by the complete liquidation of the Acquired Fund.
                                 
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

 

The Hartford Total Return Bond Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Total Return Bond Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Hartford Investment Management Company (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act.

43

 

The Hartford Total Return Bond Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.
Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board noted that the fees payable to the Sub-adviser are equal to its estimated costs in providing sub-advisory services. Accordingly, the costs and profitability for the Sub-adviser and HIFSCO were considered in the aggregate.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the

44

 

Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.

45

 

The Hartford Total Return Bond Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered any benefits to the Sub-adviser from any use of the Fund’s brokerage commissions to obtain soft dollar research.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

46

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-48 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

47

 

(IMAGE)
(IMAGE)

 

 

The Hartford Value Fund
Table of Contents
         
Manager Discussions (Unaudited)
     2  
Financial Statements
        
    4  
    6  
    7  
    8  
    9  
    10  
    20  
    22  
    23  
    25  
    25  
    26  
    27  
    28  

 

 

The Hartford Value Fund inception 04/30/2001
(subadvised by Wellington Management Company, LLP)   Investment objective — Seeks long-term total return.
Performance Overview(1) 4/30/01 — 10/31/09
Growth of a $10,000 investment in Class A which includes Sales Charge
(LINE GRAPH)
Russell 1000 Value Index is an unmanaged index measuring the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values.
You cannot invest directly in an index.
The value of shares will fluctuate so that, when redeemed, shares may be worth more or less than their original cost. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
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.
Average Annual Total Returns(2,3,4,5) (as of 10/31/09)
                         
    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.
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)   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
How did the Fund perform?
The Class A shares of The Hartford Value Fund returned 10.29%, before sales charge, for the twelve-month period ended October 31, 2009, outperforming its benchmark, the Russell 1000 Value Index, which returned 4.78% for the same period. The Fund also outperformed the 8.93% return of the average fund in the Lipper Large-Cap Value Funds peer group, a group of funds with investment strategies similar to those of the Fund.
Why did the Fund perform this way?
Broad U.S. equity markets rose during the period, but this overall increase masks two significantly different market environments. From November through early March stocks fell sharply, reflecting deepening economic worries and concerns over the U.S. government’s increasing involvement in the economy. Beginning in early March stocks rallied through October as investors came to believe that a Depression-like scenario was less likely. Sector returns within the Russell 1000 Value Index diverged widely in this environment, with strength in the Information Technology (+33%), Consumer Discretionary (+23%), and Materials (+18%) sectors overshadowing weakness in Financials (-8%) and Industrials (-5%).

2

 

The primary driver of the Fund’s outperformance relative (i.e. performance of the Fund as measured against the benchmark) to the benchmark was stock selection, particularly within the Industrials, Energy, and Health Care sectors. In addition, the Fund’s bottom-up (i.e. stock by stock fundamental research) stock-by-stock decision making process often results in sector weights that vary from those of the benchmark. During the period these residual sector weights were additive to results due to overweight (i.e. the Fund’s sector position was greater than the benchmark position) positions in Information Technology and Consumer Staples and an underweight (i.e. the Fund’s sector position was less than the benchmark position) position in Financials.
Among the top contributors to benchmark-relative returns were Citigroup (Financials), Schering-Plough (Health Care), and Goldman Sachs (Financials). We purchased Citigroup early in the period and eliminated it after determining the fundamentals were continuing to deteriorate. Since Citigroup was a large benchmark holding, our lack of exposure through most of the period benefited our relative results. Shares of pharmaceutical company Schering-Plough jumped after the company announced a definitive merger agreement with Merck. Shares of U.S. bank holding company and investment bank Goldman Sachs Group benefited from the firm’s relative strength versus peers, its ability to pay back government loans, and earnings lift from its underwriting business in the wake of higher levels of new stock offerings. Top absolute (i.e. total return) contributors for the period also included Capital Goods company Cummins (Industrials).
International Paper (Materials), Host Hotels & Resorts (Financials), and ACE (Financials) detracted most from benchmark-relative returns. Not owning International Paper as the stock rallied from March through October hurt relative results. Host Hotels & Resorts, a lodging firm operating luxury and upscale premium brand hotel properties, also detracted from performance as we did not own the shares when the market began to discount significant earnings recovery into the share price. Worldwide property/casualty insurance and reinsurance provider ACE underperformed over the course of the year on concerns over their reserve levels. Stocks that detracted most from absolute returns included banking firms Bank of America (Financials) and U.S. Bancorp (Financials) and industrial and financial conglomerate General Electric (Industrials).
What is the outlook?
As the deterioration in macroeconomic data began to moderate during the first half of the year, investors removed the worst-case depression scenario from their outlook, propelling stocks higher. Government intervention helped to stabilize the financial sector, resulting in tightening credit spreads (i.e. short and long term interest rates moving closer together) and greater flexibility for companies to raise both debt and equity financing. While recent economic releases point to an improvement from the dire outlook of early 2009, the U.S. economy is by no means out of the woods. Consumer and corporate debt levels remain high, unemployment now exceeds 10%, and the government’s unprecedented monetary and fiscal stimulus has raised the specter of inflation down the road.
The market’s sharp rally off its March lows narrowed or eliminated many previously-attractive disparities between market price and our assessment of fair value. The strength of the rally suggests that investors are pricing in not just the removal of the worst-case scenario, but a robust economic recovery. In this environment we continue to apply our time-tested philosophy focused on building a portfolio in which expected growth and the dividend yield are better than the market and valuations are lower than the market. Based on bottom-up stock decisions, we ended the period most overweight the Information Technology, Health Care, and Consumer Staples sectors; our largest underweights were in Utilities, Financials, and Telecommunications Services.
Diversification by Industry
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

 

The Hartford Value Fund
Schedule of Investments
October 31, 2009
(000’s Omitted)
                 
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  
       
 
      
The accompanying notes are an integral part of these financial statements.

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.
The accompanying notes are an integral part of these financial statements.

5

 

The Hartford Value Fund
Investment Valuation Hierarchy Level Summary
October 31, 2009
(000’s Omitted)
                                 
    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.
The accompanying notes are an integral part of these financial statements.

6

 

The Hartford Value Fund
Statement of Assets and Liabilities
October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

7

 

The Hartford Value Fund
Statement of Operations
For the Year Ended October 31, 2009
(000’s Omitted)
         
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  
 
      
The accompanying notes are an integral part of these financial statements.

8

 

The Hartford Value Fund
Statement of Changes in Net Assets
(000’s Omitted)
                 
    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  
 
            
The accompanying notes are an integral part of these financial statements.

9

 

The Hartford Value Fund
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 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

 

The Hartford Value Fund
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)   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

 

The Hartford Value Fund
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
   $ 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

 

The Hartford Value Fund
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

 

The Hartford Value Fund
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

 

The Hartford Value Fund
Notes to Financial Statements
October 31, 2009
(000’s Omitted)
[This page intentionally left plank.]

19

 

The Hartford Value Fund
Financial Highlights
- 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
   $ 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

 

- 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)
  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

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
The Hartford Mutual Funds, Inc.
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Hartford Value Fund (one of the portfolios constituting The Hartford Mutual Funds, Inc. (the Funds)) as of October 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Hartford Value Fund of The Hartford Mutual Funds, Inc. at October 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
(SIGNATURE)
Minneapolis, MN
December 15, 2009

22

 

The Hartford Value Fund
Directors and Officers (Unaudited)
The Board of Directors appoints officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the Directors. Each director serves until his or her death, resignation, or retirement or until the next annual meeting of shareholders is held or until his or her successor is elected and qualifies.
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and two of the Funds’ directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which, as of October 31, 2009, collectively consist of 93 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays to The Hartford a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its other officers or directors who are employed by The Hartford.
Non-Interested Directors
Lynn S. Birdsong (1946) Director since 2003, Co-Chairman of the Investment Committee
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.
Robert M. Gavin, Jr. (1940) Director since 2002 (MF) and 1986 (MF2), Chairman of the Board since 2004
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.
Duane E. Hill (1945) Director since 2001 (MF) and 2002 (MF2), Chairman of the Nominating Committee
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.
Sandra S. Jaffee (1941) Director since 2005
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).
William P. Johnston (1944) Director since 2005, Chairman of the Compliance Committee
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

 

The Hartford Value Fund
Directors and Officers (Unaudited) — (continued)
Phillip O. Peterson (1944) Director since 2002 (MF) and 2000 (MF2), Chairman of the Audit Committee
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.
Lemma W. Senbet (1946) Director since 2005
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.
Interested Directors and Officers
Lowndes A. Smith (1939) Director since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment Committee
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.
John C. Walters* (1962) Director since 2008
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).
Other Officers
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.
Tamara L. Fagely (1958) Vice President, Treasurer and Controller since 2002 (MF) 1993 (MF2)
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.
Brian Ferrell (1962) AML Compliance Officer since 2008
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. Robert J. Froehlich (1953) Senior Managing Director since 2009
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

 

Thomas D. Jones, III (1965) Vice President and Chief Compliance Officer since 2006
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.
Edward P. Macdonald (1967) Vice President, Secretary and Chief Legal Officer since 2005
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.
Vernon J. Meyer (1964) Vice President since 2006
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.
D. Keith Sloane (1960) Vice President since 2009
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.
Jane Wolak (1961) Vice President since 2009
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.
HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve-month period ended June 30, 2009 is 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.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms are 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 Form N-Q 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.

25

 

The Hartford Value Fund
Federal Tax Information (Unaudited)
The information set forth below is for the Fund’s fiscal year as required by federal tax law. Shareholders, however, must report distributions on a calendar year basis for income tax purposes which may include distributions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2010. Shareholders may wish to consult a tax advisor on how to report distributions for state and local purposes.
         
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%.
Detailed below are the per share distributions made for the fiscal year ended October 31, 2009.
                                 
            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  
The Fund also designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares.

26

 

The Hartford Value Fund
Expense Example (Unaudited)
Your Fund’s Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (CDSC) (2) ongoing costs including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the period of April 30, 2009 through October 31, 2009.
Actual Expenses
The first set of columns of the table below provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second set of columns of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
                                                                           
    Actual return     Hypothetical (5% return before expenses)                
                    Expenses paid                     Expenses paid           Days in    
                    during the period                     during the period           the   Days
    Beginning   Ending Account   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

 

The Hartford Value Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that each mutual fund’s board of directors, including a majority of those directors who are not “interested persons” of the mutual fund, as defined in the 1940 Act (the “Independent Directors”), annually review and consider the continuation of the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the “Board”) of The Hartford Value Fund (the “Fund”), including each of the Independent Directors, unanimously voted to approve the continuation of the investment management agreement for the Fund with Hartford Investment Financial Services, LLC (“HIFSCO”) and the continuation of the investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser Wellington Management Company, LLP (“Sub-adviser,” and together with HIFSCO, “Advisers”) (collectively, the “Agreements”).
In the months preceding the August 4-5, 2009 meeting, the Board requested, received, and reviewed written responses from the Advisers to questions posed to them on behalf of the Independent Directors and supporting materials relating to those questions and responses. The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the annual approval of the Agreements at the Board’s meetings held on June 23-24, 2009 and August 4-5, 2009. Information provided to the Board at its meetings throughout the year, included, among other things, reports on Fund performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided to the Fund by the Advisers, and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO at the Board’s meetings on June 23-24, 2009 and August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by independent legal counsel, engaged two service providers to assist them with evaluating the Agreements with respect to the Fund. Lipper Inc. (“Lipper”), an independent provider of investment company data, was retained to provide the Board with reports on how the Fund’s contractual management fees, actual management fees, other non-management fees, overall expense ratios and investment performance compared to those of mutual funds with similar investment objectives. The Independent Directors also engaged an independent financial services consulting firm (the “Consultant”) to assist them in evaluating the Fund’s management fees, sub-advisory fees, other non-management fees, overall expense ratios and investment performance. In addition, the Consultant reviewed the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement.
In determining to continue the Agreements for the Fund, the members of the Board reviewed and evaluated information and factors they believed to be relevant and appropriate in light of the information that the Board deemed necessary and appropriate and through the exercise of their reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to continue the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the continuation of the Agreements. A more detailed discussion of the factors the Board considered with respect to its approval of the Agreements is provided below.
Nature, Extent And Quality Of Services Provided by the Advisers
The Board requested and considered information concerning the nature, extent, and quality of the services provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements and the range of services provided by the Advisers. In this regard, the Board considered information provided to it by HIFSCO concerning the Agreements, which were amended and restated to more completely reflect the services provided to the Fund, but did not result in a material amendment to the Fund’s prior contractual arrangement. The Board considered the Advisers’ professional personnel who provide services to the Fund, including each Adviser’s ability and experience in attracting and retaining qualified personnel to service the Fund. The Board considered each Adviser’s reputation and overall financial strength, as well as its willingness to consider and implement organizational and operational changes designed to improve services to the Fund. In addition, the Board considered the quality of each Adviser’s communications with the Board and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each Adviser’s regulatory and compliance environment. In this regard, the Board requested and reviewed information on each Adviser’s compliance policies and procedures, compliance history, and a report from the Fund’s Chief Compliance Officer on each Adviser’s compliance with applicable laws and regulations, including responses to regulatory developments and compliance issues raised by regulators. The Board also noted the Advisers’ support of the Fund’s compliance control structure, particularly the resources devoted by the Advisers in support of the Fund’s obligations pursuant to Rule 38a-1 under the 1940 Act. With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO is responsible for the management of the Fund, including overseeing fund operations and service providers and provides administration services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Sub-adviser. The Board considered HIFSCO’s constant monitoring of people, process and performance, including its ongoing commitment to review and rationalize The Hartford Fund Family’s product line-up. The Board considered that HIFSCO or its affiliates are responsible for providing the Fund’s officers and paying their salaries and expenses.
With respect to the Sub-adviser, who provides day-to-day portfolio management services, the Board considered the quality of the Fund’s portfolio managers, the Sub-adviser’s other investment personnel, its investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience. The Board considered the experience of the Fund’s portfolio managers, the number of accounts managed by the portfolio managers, and the Sub-adviser’s method for compensating the portfolio managers.

28

 

Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by HIFSCO and the Sub-adviser.
Performance of the Fund and the Advisers
The Board considered the investment performance of the Fund. In this regard, the Board reviewed the performance of the Fund over different time periods presented in the materials and evaluated HIFSCO’s analysis of the Fund’s performance for these time periods. The Board considered information and materials provided to the Board by the Advisers concerning Fund performance, as well as information from Lipper comparing the investment performance of the Fund to an appropriate universe of peer funds.
The Board considered the detailed investment analytics reports provided by The Hartford’s Investment Advisory Group throughout the year. These reports include, among other things, information on the Fund’s gross and net returns, the Fund’s investment performance relative to an appropriate benchmark and peer group, various statistics concerning the Fund’s portfolio, and a narrative summary of various factors affecting Fund performance. The Board considered the Advisers’ cooperation with the Investment Committee, which assists the Board in evaluating the performance of the Fund at periodic meetings throughout the year. The Board also considered the analysis provided by the Consultant relating to the Fund’s performance track record.
In light of all the considerations noted above, the Board concluded that it had continued confidence in HIFSCO’s and the Sub-adviser’s overall capabilities to manage the Fund.
Costs of the Services and Profitability of the Advisers
The Board reviewed information regarding HIFSCO’s cost to provide investment management and related services to the Fund and HIFSCO’s profitability, both overall and for the Fund, on a pre-tax basis without regard to distribution expenses. The Board also requested and reviewed information about the profitability to HIFSCO and its affiliates from all services provided to the Fund and all aspects of their relationship with the Fund. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.
The Board considered the Consultant’s review of the profitability calculations utilized by HIFSCO in connection with the continuation of the investment management agreement. In this regard, the Consultant reported that The Hartford’s process for calculating and reporting Fund profitability is reasonable, sound and well within common industry practice.
Based on these considerations, the Board concluded that the profits anticipated to be realized by the Advisers and their affiliates from their relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided by the Advisers
The Board considered comparative information with respect to the investment management fees to be paid by the Fund to HIFSCO, the investment sub-advisory fees to be paid by HIFSCO to the Sub-adviser, and the total expense ratios of the Fund. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the management and sub-advisory fees, and total operating expenses for the Fund. The Board also reviewed information from Lipper comparing the Fund’s contractual management fees, actual management fees and overall expense ratios, relative to a group of funds selected by Lipper, in consultation with the Consultant (“Expense Group”), and a broader universe of funds selected by Lipper (“Expense Universe”). The Board considered that as of November 1, 2009, transfer agency fees in excess of the transfer agency expense limitation amount (currently 0.30%) will be reimbursed by Hartford Administrative Services Company (“HASCO”) prior to the application of the Fund’s expense limitation by HIFSCO.
While the Board recognized that comparisons between the Fund and peer funds are imprecise, given the differing service levels and characteristics of mutual funds and the different business models and cost structures of the Advisers, the comparative information provided by Lipper assisted the Board in evaluating the reasonableness of the Fund’s management fees and total operating expenses. In addition, the Board considered the analysis and recommendations of the Consultant relating to the Fund’s management and sub-advisory fees and total operating expenses.
Based on these considerations, the Board concluded that the Fund’s fees and total operating expenses, in conjunction with the information about quality of services, profitability, economies of scale, and other matters discussed, were reasonable in light of the services provided.
Economies of Scale
The Board requested and considered information regarding the Advisers’ realization of economies of scale with respect to the Fund, and whether the fee levels reflect these economies of scale for the benefit of the Fund’s investors. With respect to HIFSCO, the Board considered representations from HIFSCO that it is difficult to anticipate whether and the extent to which economies may be realized by HIFSCO as assets grow over time. The Board reviewed the breakpoints in the advisory fee schedule for the Fund, which reduces fees as Fund assets grow over

29

 

The Hartford Value Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited – (continued)
time. The Board recognized that a fund with assets beyond the last breakpoint level will continue to benefit from economies of scale, because additional assets are charged the lowest breakpoint fee, resulting in lower overall effective management fee rates. The Board also considered that expense limitations and fee waivers that reduce the Fund’s expenses at all asset levels can have the same effect as breakpoints in sharing economies of scale with shareholders, and that a schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale.
The Board reviewed and evaluated materials from Lipper showing how management fee schedules of peer funds reflect economies of scale for the benefit of investors as a peer fund’s assets hypothetically increase over time. Based on information provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there is no uniform methodology for establishing breakpoints, or uniform pattern in asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded that it was satisfied with the extent to which economies of scale would be shared for the benefit of the Fund’s shareholders, based on currently available information and the effective advisory fees and expense ratios for the Fund at its current and reasonably anticipated asset levels. The Board noted, however, that it would continue to monitor future growth in Fund assets and the appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the Advisers and their affiliates from their relationships with the Fund.
The Board reviewed information noting that Hartford Life, Inc. (“Hartford Life”) an affiliate of HIFSCO, receives fees for fund accounting and related services from the Fund, and the Board considered information on expected profits to Hartford Life or its affiliates for such services. The Board also considered that HASCO, the Fund’s transfer agent and an affiliate of HIFSCO, receives transfer agency compensation from the Fund, and the Board reviewed information on the expected profitability of the Fund’s transfer agency function to HASCO. The Board noted that HASCO is a recognized leader in providing high quality services to Fund shareholders and has received six consecutive mutual fund Dalbar service awards. The Board considered information provided by HASCO indicating that the transfer agent fees charged by HASCO to the Fund were fair and reasonable based on publicly available information.
The Board also considered that, as principal underwriter of the Fund, HIFSCO receives 12b-1 fees from the Fund and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The Board also noted that certain affiliates of HIFSCO distribute shares of the Fund and receive compensation in that connection.
The Board considered benefits to the Sub-adviser from its use of the Fund’s brokerage commissions to obtain soft dollar research, and representations from HIFSCO and the Sub-adviser that the Sub-adviser would not make any revenue-sharing payments or any other type of distribution payments to HIFSCO or its affiliates.
The Board considered the benefits to shareholders of being part of the Hartford family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds in the family, and the ability to combine holdings in the Fund with holdings in other funds to obtain a reduced sales charge. The Board considered HIFSCO’s efforts to provide investors in the family with a broad range of investment styles and asset classes and its entrepreneurial risk in initiating new funds to expand these opportunities for shareholders.
* * * *
Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the Agreements for an additional year. In reaching this decision, the Board did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. In connection with their deliberations, the Independent Directors met separately in executive session on several occasions, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

30

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
You should carefully consider investment objectives, risks, and charges and expenses of The Hartford Mutual Funds before investing. This and other information can be found in the Fund’s prospectus, which can be obtained from your investment representative or by calling 888-843-7824. Please read it carefully before you invest or send money.
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.
(THE HARTFORD LOGO)
MFAR-50 12/09 MUT 8759 Printed in U.S.A. © 2009 The Hartford, Hartford, CT 06117

 

Item 2. Code of Ethics.
     Registrant has adopted a code of ethics that applies to Registrant’s principal executive officer, principal financial officer, and controller, which is attached as an exhibit.
Item 3. Audit Committee Financial Expert.
     The Board of Directors has designated Phillip O. Peterson as an Audit Committee Financial Expert. Mr. Peterson is considered by the Board to be an independent director.
Item 4. Principal Accountant Fees and Services.

 

 

Mutual Funds Item 4 — October 31, 2009
                 
    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.

 

 

Item 5. Audit Committee of Listed Registrants.
Robert M. Gavin
Sandra S. Jaffee
William P. Johnston
Phillip O. Peterson
Item 6. Schedule of Investments
     The Schedule of Investments is included as part of the annual report filed under Item 1 of this form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
     Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
     Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
     Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors since registrant last provided disclosure in response to this requirement.

 

 

Item 11. Controls and Procedures.
  (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.
Item 12. Exhibits.
  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

 

 

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
  THE HARTFORD MUTUAL FUNDS, INC.
 		  
Date: December 14, 2009  By:   /s/ Robert M. Arena    
    Robert M. Arena   
    Its: President   
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
         
     
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   
 

 

 

EXHIBIT LIST
             
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